09 Mar Changes to Benefit-in-Kind on company cars and vans will reduce tax burden for drivers – Dillon
A temporary change in Benefit-in-Kind taxation for employee drivers of company cars and vans in County Mayo will help reduce their tax liabilities in the current climate of high inflation, Fine Gael TD Alan Dillon has said.
Deputy Dillon said: Ireland moved towards a CO2-based benefit in kind regime for company cars on January 1st this year – an important part of our effort to reduce emissions from road transport and to meet our climate action targets.
“However, concerns were raised by a substantial number of employees with cars and vans within the normal emissions range, some who need to travel countrywide, and experienced large increases in their income tax liabilities since the beginning of the year.
Deputy Dillon said “I have raised the issue in relation to BIK hikes with the Minister and Government officials at highest levels. The parliamentary responses I received were very un-satisfactory and a number of Government TD and I requested the Minister to revisit the implementation of such a measure especially within a cost-of-living crisis.”
“Government has responded to these concerns, and a relief of €10,000 will now be applied to the Original Market Value (OMV) of cars in Category A-D. This will in turn reduce the amount of Benefit-in-Kind which drivers are liable for. The measure will not apply to vehicles in the Category E band.
“The amount taxable as BIK is determined by the car’s Original Market Value, the annual business kilometres driven and CO2 emissions-based bands. When calculating their benefit in kind liability, employers can now reduce the original market value by €10,000. This relief measure will also apply to company vans and electric vehicles.
“For electric vehicles, the original market value deduction of €10,000 will be in addition to the existing relief of €35,000 that is currently available for EVs, bringing the total relief for 2023 to €45,000.
“In addition, the upper limit in the highest mileage band is amended by way of a 4,000km reduction, so that the highest mileage band is now entered into at 48,001km.
“Government remains committed to reducing emissions from road transport and that was the reasoning behind the new benefit-in-kind regime introduced at the start of the year.
“However, many recipients were facing much higher payments following the introduction of new rates. It is hoped the temporary measure introduced will help mitigate some of those increases,” Deputy Dillon said.