Changes to Company Vehicle BIK for 2023

Company cars

1st of January 2023 will see changes to company vehicle Benefit in Kind (BIK) calculations. These changes affect cars, vans and electric vehicles.

Company Cars

Prior to 2023 the Benefit in Kind arising from private use of company owned cars was based on the Original Market Value (OMV) and the business mileage done in the year. Lower Business Kms travelled meant a higher proportion of the OMV was considered to be a benefit to the employee. More business KM’s meant lower BIK.

From 2023 the calculation of BIK will also take into account the Carbon Dioxide emissions for the vehicle.

There are still bands based on business mileage, so more business mileage means less BIK. Now lower vehicle emissions will also mean less BIK.

The minimum and maximum OMV percentage rates have shifted higher. Low business Kms and high emissions will see a maximum rate of 37.5% vs the previous maximum rate of 30% being applied to the OMV. At the other end high business Kms and low emissions will see a minimum rate of 9% vs the previous minimum of 6%.

Furthermore, the mileage bands have also shifted. The high BIK band used to be 24,000 Kms, but this has increased to 26,000. Meaning the high rate of BIK is applicable to more people. The lowest level of BIK now is applicable at 52,001 Kms, it used to be 48,000 kms.

So generally, expect the BIK on personal use of company vehicles to increase across the board.

It’s another dimension to take into account. Any people with existing company vehicles set up in Parolla will need to enter the manufacturers emissions rate into the employee benefit setup.

Company Vans

The changes to company vehicle BIK for 2023 also impacts vans. The Benefit in Kind on personal use of company vans will increase from 5% to 8% of the Original Market Value.

Electric Vehicles

Before 2023 electric vehicles benefited either from a full BIK exemption, or a €50,000 relief on the value of the OMV when calculating the BIK.

This relief is being reduced over the next three years:

  • 2023 the relief will be reduced to €35,000
  • 2024 the relief will be €20,000
  • 2025 the relief will be €10,000

Documents

CO2 emissions for cars can be found here

Parolla support document here.

Revenue PDF document below.

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-01b.pdf