The rules around company vehicle BIK will be updated for 2026. The main change is the introduction of the A1 Vehicle Category for zero emission vehicles.
What’s Changing Between 2025 and 2026?
Benefit-in-Kind (BIK) on company vehicles continues to evolve as Ireland shifts toward lower-emission transport. Here’s a quick summary of what employers and payroll teams need to know when preparing for 2026 payroll.
What’s in place for 2025
In 2025, the temporary reliefs introduced in recent budgets remain active:
- Electric Vehicles (EVs) continue to benefit from a €35,000 reduction in Original Market Value (OMV) when calculating BIK.
- This reduction often results in little or no BIK for lower-cost EVs.
- CO₂-based BIK bands still apply for petrol and diesel cars, with rates tied to business mileage.
These measures continue to make EVs the most tax-efficient company-car option in 2025.
What changes from 1 January 2026
1. New BIK Category A1 for EVs
A new EV-specific band, Category A1, is being introduced.
BIK rates for EVs will range from 6% to 15%, depending on annual business mileage.
This moves EVs onto dedicated BIK rates rather than relying on the existing CO₂ bands.
2. EV OMV Relief Tapers Down
The current €35,000 reduction in OMV will decrease:
- €20,000 relief in 2026
- €10,000 relief in 2027
This means the tax advantage for higher-value EVs will gradually reduce over time.
3. Standard company car BIK rules continue
Petrol, diesel and hybrid vehicles remain on the existing mileage-and-emissions-based structure, but the relative advantage of EVs narrows slightly as the OMV relief tapers.
What this means for employers
- EVs remain tax-efficient in 2026, especially for organisations with high-mileage roles.
- Payroll teams should review OMVs and mileage records ahead of 2026 to ensure accurate BIK calculations. See our guide here.
- Budgeting for fleet costs should take account of the reduced EV relief from 2026 onward.