Louth TD welcomes changes to Benefit-in-Kind taxation

A temporary change in Benefit-in-Kind taxation for employee drivers of company cars and vans will help reduce their tax liabilities in the current climate of high inflation, Louth Fine Gael TD Fergus O’Dowd has said.

Deputy O’Dowd said:

“Ireland moved towards a CO2-based benefit in kind regime for company cars on January 1st this year – which was agreed a number of years ago before Covid and the Ukrainian war in an effort to reduce emissions from road transport and to meet our climate action targets.

“However, I have been consistently raising my significant concerns with relevant Ministers since last September in respect of the substantial number of employees with cars and vans who were set to be impacted by changes introduced from January the 1st at the worst possible time considering the cost of living crisis we faced over the last 18 months.

“The government has now 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.”

The Louth TD said that 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.

He continued: 

“Whilst I support our targets to reducing emissions from road transport I made it clear to government colleagues that the implementation of this strategy would negatively impact not only peoples pockets but also the number of people that would choose EVs as their company car.

“It is hoped the temporary measure introduced will help mitigate some of those increases in particular as we continue to face a cost of living crisis.” O’Dowd said.