Amendment to Company Vehicle BIK Rules

by | Sep 19, 2022 | Advice

From 1 January 2023, a new method of calculating Benefit in Kind (BIK) due on company cars will come into effect.

So, what is Benefit in Kind (BIK)?

BIK is any non-cash benefit of monetary value that you provide for your employee. These benefits can also be referred to as notional pay or perks. These benefits have monetary value, so they must be treated as taxable income. In this case, an employer who provides a vehicle made available to an employee, for work & private use.

From 1 January 2023, BIK on company cars will be calculated with reference to CO2 emissions.

The new method

From 2023 onwards, the BIK cash equivalent on the use of a vehicle provided by the employer will be determined based on both the business mileage undertaken and the vehicle’s CO2 emissions.

Please find details below:

 

Example

Employee has use of a car provided by his or her employer on 1 January 2023.

The OMV of the car is €28,000. Per the manufacturer, the car produces 120g/km in CO₂ emissions.

The actual business kilometers in the year were 32,000 kilometers. 120g/km in CO₂ emissions puts the car in vehicle category C in Table B.

As the employee drove 32,000 kilometers in the year, the cash equivalent is equal to the OMV x 24% (mileage between 26,001 and 39,000, see table A).

BIK Calculation: Cash Equivalent (OMV x 24%) €28,000 x 24% = €6,720

 

 

 

 

 

BIK on Vans

For the year of 2023 and onwards, the cash equivalent for vans will increase from 5% to 8% of the Original Market Value (OMV).

BIK on Electric Vehicles

Any exemption from BIK currently in effect will be phased out over the next 4 years.

From 2023 – 2025, the cash equivalent will be calculated based on the actual original market value (OMV) of the vehicle reduced by:

  • €35,000 in respect of vehicles made available in the 2023 year of assessment;
  • €20,000 in respect of vehicles made available in the 2024 year of assessment; and
  • €10,000 in respect of vehicles made available in the 2025 year of assessment.

 

 

 

 

 

 

 

 

Please note this article is for information purposes and does not constitute advice. Details correct at time of publishing.