BIK on EVs.

liamog

Mod Note: I'm going to give Mad_Lad the benefit of the doubt, as his post was within 1 minute of the previous mod note. Discussion of Van BIK has been removed as off topic. Any further discussion will result in cards, if it's not specific to EV exemptions.

innrain

grogi wrote: »

If you got it in 2020, you will be BIK exempt until 2022.

That is the initial read but at a closer look there is no mention of the purchase date. To increase the confusion the last tax an duty manual 05-04-02 speaks about a 2019-2021 exemption, which subsequently was promise an extension to 2022 but not finding anything.

Anyway it seems that the law does not take in the account the purchase date but the year your giving to the employee the car for personal use.

The previous exemption allows for the whole period up to 31/12/2021. Why an extension would restrict that?

rocketspocket

innrain wrote: »

That is the initial read but at a closer look there is no mention of the purchase date. To increase the confusion the last tax an duty manual 05-04-02 speaks about a 2019-2021 exemption, which subsequently was promise an extension to 2022 but not finding anything.

Anyway it seems that the law does not take in the account the purchase date but the year your giving to the employee the car for personal use.

The previous exemption allows for the whole period up to 31/12/2021. Why an extension would restrict that?

Was it not in the finance bill 2019? -
"Section 5 of the Bill amends the current exemption for electric cars and vans with a market value of less than €50,000 in section 121 of the Taxes Consolidation Act 1997 by extending the exemption to 31 December 2022."

https://www.charteredaccountants.ie/News/finance-bill-2019-personal-and-employee-tax

drunkmonkey

Slightly off Topic, but is 20% the most vat on the car your allowed reclaim, just doing a vat retrurn here, pretty sure i'm correct just checkintg has someone else a different take on it. (basically 20% of the 23% Vat?)

SomeGuyCalledMi

This thread has lots of helpful information. I have another question which has my accountant scratching his head.

Due to the fact that you don't get the SEAI 5000 grant when you are buying an EV for your business. Are you therefor better off getting a second hand one where the 5000 discount is built in so to speak?

My accountant says it only applies to new vehicles. But the revenue web site says "The treatment applies to both new and used cars."

Obviously the car would have an OMV under 50k for zero BIK. I'm thinking Kia Niro or an ID3 if I can find one used.

PickYourName

SomeGuyCalledMi wrote: »

This thread has lots of helpful information. I have another question which has my accountant scratching his head.

Due to the fact that you don't get the SEAI 5000 grant when you are buying an EV for your business. Are you therefor better off getting a second hand one where the 5000 discount is built in so to speak?

My accountant says it only applies to new vehicles. But the revenue web site says "The treatment applies to both new and used cars."

Obviously the car would have an OMV under 50k for zero BIK. I'm thinking Kia Niro or an ID3 if I can find one used.

I’m no accountant, but my reading of things is that the OMV is what it means: the original market value of the car (before any grant) when it was new. It doesn’t matter what the car’s value is now (secondhand), so the answer is “no” to your question, other than the usual advantage of secondhand of paying less cash out than for a new one.

It’s an interesting point, though. The existence of the grant would suggest that the apparent depreciation of new EVs is very high, at least initially. Not sure if that’s actually what happens: you’d have to survey to find out.

air

It applies to both new and used cars at registration, not if you buy a used car that's already registered here. I think that might be the bit you're missing.
By buying second hand you lose accelerated capital allowances and the ability to reclaim a small portion of the VAT also.

Zenith74

SomeGuyCalledMi wrote: »

This thread has lots of helpful information. I have another question which has my accountant scratching his head.

Due to the fact that you don't get the SEAI 5000 grant when you are buying an EV for your business. Are you therefor better off getting a second hand one where the 5000 discount is built in so to speak?

My accountant says it only applies to new vehicles. But the revenue web site says "The treatment applies to both new and used cars."

Obviously the car would have an OMV under 50k for zero BIK. I'm thinking Kia Niro or an ID3 if I can find one used.

I bought an ex-demo through the company, makes much more sense to me cost wise, assuming you own the company. If you don’t then take whatever your employer will give you :-).


0% BIK applies to new and secondhand. €5000 VRT exemption applies at registration time of new or imported cars. €5000 grant applies to new cars bought in Ireland only. I’d assume if you pay VAT on the car (imported say) you can reclaim the 20% of the VAT, certainly that is what my accountant allowed.

air

Zenith74 wrote: »

I’d assume if you pay VAT on the car (imported say) you can reclaim the 20% of the VAT, certainly that is what my accountant allowed.

I believe so, but this relies on buying a vehicle that was owned by a vat registered company (ex lease or whatever) previously in the UK so that it can be sold to you ex VAT.

I think this is the only situation in which a UK import can make any sense now post Brexit.

eddhorse

I always thought there was no point in getting a second hand car if you were to be charged BIK on the OMV original market value.

If it is 0% I guess that now makes sense for electric vehicles but buyer beware it won't stay at 0% forever

air

BIK is a lot better value if you own the company.

air

air wrote: »

BIK is a lot better value if you own the company.

How so?

You're spending company money on a car for yourself instead of paying yourself...... It's like the cycle to work scheme with a car instead of a bike. And when BIK is applicable how is it better value?

On an ICE at 30% BIK over 7 years the out of pocket tax paid is the OMV of the car whether you own the company or not. Prior to the 0% BIK rate for EVs there was no actual benefit in most company owners having a company car unless they were doing significant business miles.... And most don't.

air

Well for EVs with 0% BIK & ACA it's a game changer, if you want a car your company can lease it and you effectively get the use of it without the company or yourself paying any tax.

When paying BIK, you have to pay the tax of course but you're not really losing out on the notional income in the same way a non-proprietary employee does when getting the benefit of a vehicle.

The company isn't paying out that notional value to anyone, you're just paying the tax on it.

Edit: Obviously at 30% it makes little sense to anyone though, that's a given.

air

air wrote: »

....

The company isn't paying out that notional value to anyone, you're just paying the tax on it.

Edit: Obviously at 30% it makes little sense to anyone though, that's a given.

Exactly the same situation if you are an employee.

Augeo

Augeo wrote: »

How so?

You're spending company money on a car for yourself instead of paying yourself...... It's like the cycle to work scheme with a car instead of a bike. And when BIK is applicable how is it better value?

On an ICE at 30% BIK over 7 years the out of pocket tax paid is the OMV of the car whether you own the company or not. Prior to the 0% BIK rate for EVs there was no actual benefit in most company owners having a company car unless they were doing significant business miles.... And most don't.

air wrote: »

Well for EVs with 0% BIK & ACA it's a game changer, if you want a car your company can lease it and you effectively get the use of it without the company or yourself paying any tax.

......

The company isn't paying out that notional value to anyone, you're just paying the tax on it.

Edit: Obviously at 30% it makes little sense to anyone though, that's a given.

Of course the 0% bik is a game changer but you've done nothing to explain your statement that '
BIK is a lot better value if you own the company.'

Perhaps detail it with figures to illustrate?

air

Augeo wrote: »

Exactly the same situation if you are an employee.

Not necessarily.

In many cases a company car is offered as a perk and in lieu of some additional salary, it all depends on the deal the employee strikes with their employer.

You would need to know how much salary the employee sacrifices to get the vehicle as well as their number of business kilometres / BIK rate and the amount of personal driving they do in order to make a true judgement on the relative merits.

air

air wrote: »

Not necessarily.

In many cases a company car is offered as a perk and in lieu of some additional salary, it all depends on the deal the employee strikes with their employer.

...

It is fact. If you think otherwise detail figures to illustrate.

In cases of proprietary director its always instead of salary or pension etc.

Most folk going for a company EV when they are proprietary directors do minimal business miles. If they'd done significant business miles they'd have had a company ICE previous, which must company EV car driving folk haven't.

air

Augeo wrote: »

In cases of proprietary director its always instead of salary or pension etc.

Of course, look this is totally off topic, happy to discuss the relative merits with you in another thread or via a PM if you're really keen!

SomeGuyCalledMi

Thanks for all the replies. I should have mentioned that I own the company so its my money and not my bosses.

I think I'll buy a demo model id3 and as long as it was less then 50k new before grants I'm good. Sounds like a similar situation to you Zenith74 except the VAT part as I'm not getting a commercial vehicle. I do very little mileage for my company but it seems I can still buy an electric car with 0 BIK which is awesome.

Ill get my account to check with his tax expert to avoid any surprises.

jordan191

SomeGuyCalledMi wrote: »

Thanks for all the replies. I should have mentioned that I own the company so its my money and not my bosses.

I think I'll buy a demo model id3 and as long as it was less then 50k new before grants I'm good. Sounds like a similar situation to you Zenith74 except the VAT part as I'm not getting a commercial vehicle. I do very little mileage for my company but it seems I can still buy an electric car with 0 BIK which is awesome.

Ill get my account to check with his tax expert to avoid any surprises.

If you but a new ev car, through your company you can claim back 20% of the vat back as long as 60% of your annual mileage is for company driving, so on a new say model 3 it's approx 2 grand vat back, ACA is worth another 3 k

rocketspocket

jordan191 wrote: »

If you but a new ev car, through your company you can claim back 20% of the vat back as long as 60% of your annual mileage is for company driving, so on a new say model 3 it's approx 2 grand vat back, ACA is worth another 3 k

can't see that many people did 60% business in 2020..

jordan191

rocketspocket wrote: »

can't see that many people did 60% business in 2020..

I did in mine, I'm an engineer doing about 500km a week for work, construction never really stopped

grogi

rocketspocket wrote: »

can't see that many people did 60% business in 2020..

You cannot really do private mileage now, while work is still allowed.

Zenith74

We received further clarity from Revenue on the BIK for electric vehicles and it is disappointing -

In relation to your query the electric car must have been made available to the Employee in the tax year 2020. If this is the case the exemption remains in place until 2022.

drunkmonkey

How do you see BIK costs in 2023 when it moves to business milage and emissions. I think it's positive, will no longer be based on the new price of the car, opens up a lot more options for buying a used electric and diesel/petrol electric.

wassie

Zenith74 wrote: »

We received further clarity from Revenue on the BIK for electric vehicles and it is disappointing -

In relation to your query the electric car must have been made available to the Employee in the tax year 2020. If this is the case the exemption remains in place until 2022.

What was your actual wording of your query if you don't mind?

lafors

Zenith74 wrote: »

We received further clarity from Revenue on the BIK for electric vehicles and it is disappointing -

In relation to your query the electric car must have been made available to the Employee in the tax year 2020. If this is the case the exemption remains in place until 2022.

So they are saying that if an employee get's an EV now (2021) that they are liable for BIK as they would be on an ICE car?

Zenith74

lafors wrote: »

So they are saying that if an employee get's an EV now (2021) that they are liable for BIK as they would be on an ICE car?

Yes.

drunkmonkey

Zenith74 wrote: »

Yes.

Only on the value over 50k though?

lafors

Zenith74 wrote: »

Yes.

That is huge, this is not clear.

The latest official document on it we have is part 05 05-04-02 (below)

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-04-02.pdf

FYI this is the document linked on the Revenues own site also.

In this document page 12-15 covers Electric Cars.
There is no reference directly to cars supplied in 2021 except in table in 1.4.3 which lists
"Electric vehicle first made available to the employee either prior to 10 October 2017 or on or after 10 October 2018"
Tax treatment for 2021 - "Full BIK exemption"
(note also covers partial relief for >50k OMSP)


The image that was being originally referred to with 2020 date is on the revenue site here....
https://www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/private-use-of-company-cars/exemptions.aspx
That was published on 07 January 2020.

The document I link above was published on 14 July 2020, so one would assume (revenue and assume don't mix) that the document is valid.

FYI our company has quite a lot of people on electric company cars at this stage ~10+ and our accountants agree with the part 05 05-04-02 document.

I'd like to see the wording also Zenith if you don't mind

KCross

lafors wrote: »

FYI our company has quite a lot of people on electric company cars at this stage ~10+ and our accountants agree with the part 05 05-04-02 document.

They would be OK though since they presumably all got their company EV's prior to 31/12/2020 and so are exempt until 31/12/2021 at which time a new BIK scheme is to be introduced.

If they got it as a 211 reg then it looks like they have an issue.


I'll agree though that this one reference on the revenue site to 31 Dec 2020 has been a source of confusion on the forum. Its been discussed a few time already.

Zenith74

drunkmonkey wrote: »

Only on the value over 50k though?

No, they're saying the 0% BIK exemption is not available to anybody new at this point, you had to have the car before 2021.

I personally think they're misinterpreting the tax code, but we asked them to clarify the position a second time and got the response mentioned above.

I didn't personally make the enquiry, I'll try to get the exact wording though.

KCross wrote: »

They would be OK though since they presumably all got their company EV's prior to 31/12/2020 and so are exempt until 31/12/2021 at which time a new BIK scheme is to be introduced.

Small correction, they're exempt until 31/12/2022.

Keggers74

drunkmonkey wrote: »

How do you see BIK costs in 2023 when it moves to business milage and emissions. I think it's positive, will no longer be based on the new price of the car, opens up a lot more options for buying a used electric and diesel/petrol electric.

Interested in your reference to "will no longer be based on the new price of the car,".

I had thought it was still going to be Original Market Value x X%, with X% being anywhere between 9% and 37.5% and based on business mileage and emissions? In which case the new price of the car remains just as relevant?

KCross

Zenith74 wrote: »

I personally think they're misinterpreting the tax code...

It does seem that way alright.

When the exemption was first floated they limited it to 1 year and there was alot of pushback as people dont buy company cars for one year so they extended it in the next budget to 3 years which took it to 31/12/2021 and further extended it to 2022 in the following budget.

The idea then was that a new BIK regime would be brought into play in 2023.

Having a "gap year" where no one can buy new EV's and get the BIK exemption makes no sense and is counter productive to government policy of encouraging EV uptake. Until they put it in black and white and change the revenue website you are taking a big chance buying a 211 and expecting the BIK exemption.

drunkmonkey

Keggers74 wrote: »

Interested in your reference to "will no longer be based on the new price of the car,".

I had thought it was still going to be Original Market Value x X%, with X% being anywhere between 9% and 37.5% and based on business mileage and emissions? In which case the new price of the car remains just as relevant?

Nope car value has nothing to do with what's coming in 2023. Business milage and emissions only.

Income tax
The BIK charge on company cars will change from 2023, and will be based on C02 emission levels and business mileage as opposed to a car’s value.
The BIK rate on company vans is to be increased from 5% to 8% from 2023.
Qualifying expenditure on business cars to be determined by CO2 emissions thresholds from 1 January 2021.
https://www.grantthornton.ie/insights/blogs/finance-bill-2019/

Zenith74

drunkmonkey wrote: »

Nope car value has nothing to do with what's coming in 2023. Business milage and emissions only.

Income tax
The BIK charge on company cars will change from 2023, and will be based on C02 emission levels and business mileage as opposed to a car’s value.
The BIK rate on company vans is to be increased from 5% to 8% from 2023.
Qualifying expenditure on business cars to be determined by CO2 emissions thresholds from 1 January 2021.
https://www.grantthornton.ie/insights/blogs/finance-bill-2019/

I don't think that's correct tbh.

The tax manual says -
For the year of assessment 2023 and subsequent years, the cash equivalent of the benefit of a car shall be an amount determined by the formula—

Original market value x A

where—
A is a percentage, based on vehicle categories as set out in Table B to this subsection

The table referred to gives you a percentage between 9% and 37.5% depending on the CO2 emissions of the vehicle and the mileage you do. Reckon that Grant Thornton site may be just poorly worded.

KCross

Zenith74 wrote: »

We received further clarity from Revenue on the BIK for electric vehicles and it is disappointing -

In relation to your query the electric car must have been made available to the Employee in the tax year 2020. If this is the case the exemption remains in place until 2022.

I think its defo a misinterpretation or the question asked was specific to a car bought in 2018.

In this revenue doc you can see the reference to Dec 2020 (top of page 19)
https://www.revenue.ie/en/tax-professionals/documents/notes-for-guidance/tca/part05.pdf

The text is

Where an electric vehicle is made available to an employee during the period 1 January 2019 to 31 December 2022 and the original market value of the car does not exceed €50,000, no amount shall be treated as emoluments.

Where an electric vehicle is made available to an employee during the period 1 January 2019 to 31 December 2020 is an electric vehicle:
• the original market value of the car exceeds €50,000, and
• the car was first made available to the employee during the period 10 October
2017 to 9 October 2018
no amount shall be treated as emoluments.

Where an electric vehicle is made available during the period 1 January 2019 to 31 December 2022 and the original market value of the car exceeds €50,000, the cash equivalent of the car shall be computed on the original market value of the car reduced by €50,000.

It looks like the Dec 2020 requirement is specific to those people who bought EV's worth more than €50k back in 2017/2018.... they are fully exempt from BIK to the full value of the car upto Dec 2020.

When they then introduced the €50k cap they introduced the first paragraph into the Finance Act and that specifically says Dec 2022.


Full text showing all the context is also here and I'd imagine the Chartered accountants would have it correct...
https://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/sec0121.html

boccy23

Stupid question, but if it is to be based on CO2 emissions and they are so low, will the BIK still continue to be significantly lower than a Diesel / Hybrid equivalent (albeit not Zero)?

KCross

boccy23 wrote: »

Stupid question, but if it is to be based on CO2 emissions and they are so low, will the BIK still continue to be significantly lower than a Diesel / Hybrid equivalent (albeit not Zero)?

I think that would be a given. Government policy is to encourage low-emission vehicles and BIK will play a part in that.

There might not be a huge difference though between EV and hybrid since hybrids (particularly PHEV's) have low emissions.

I guess we'll need to wait until the budget of 2022 to see the fine detail of that new BIK regime though.

lafors

KCross wrote: »

They would be OK though since they presumably all got their company EV's prior to 31/12/2020 and so are exempt until 31/12/2021 at which time a new BIK scheme is to be introduced.

If they got it as a 211 reg then it looks like they have an issue.


I'll agree though that this one reference on the revenue site to 31 Dec 2020 has been a source of confusion on the forum. Its been discussed a few time already.

Unfortunately not, and I'm one of those unfortunates, my current car is going back this month.
I got it 3 years go in 2018 and was covered by the 0% BIK. I don't have an option except to change. The way I see it is that I hope they cop on and keep it the same for at least this year. If I were to get a ICE car I'd be paying BIK anyway so I'll swallow that bitter pill if it comes along.
Personally after having an EV for the last 3 years I couldn't see myself going back to an ICE, the EV is just too good (classic big engined V8/V10/V12 are exempt from that statement )

drunkmonkey

Zenith74 wrote: »

I don't think that's correct tbh.

Deloitte says the same thing and it was published this year..

−New rules to be introduced from 1 January 2023 in relation
to company vehicles
−Will apply 5 different categories depending on Co2 emissions
−Calculates the BIK based on the category of the vehicle and
the business mileage
−BIK charge will be calculated at between 9% and 37.5%
−Currently calculated at between 5% and 30%
−Exemption for electric vehicles will be abolished

Zenith74

KCross wrote: »

I think its defo a misinterpretation or the question asked was specific to a car bought in 2018.

In this revenue doc you can see the reference to Dec 2020 (top of page 19)
https://www.revenue.ie/en/tax-professionals/documents/notes-for-guidance/tca/part05.pdf

The text is

Where an electric vehicle is made available to an employee during the period 1 January 2019 to 31 December 2022 and the original market value of the car does not exceed €50,000, no amount shall be treated as emoluments.

Where an electric vehicle is made available to an employee during the period 1 January 2019 to 31 December 2020 is an electric vehicle:
• the original market value of the car exceeds €50,000, and
• the car was first made available to the employee during the period 10 October
2017 to 9 October 2018
no amount shall be treated as emoluments.

Where an electric vehicle is made available during the period 1 January 2019 to 31 December 2022 and the original market value of the car exceeds €50,000, the cash equivalent of the car shall be computed on the original market value of the car reduced by €50,000.

It looks like the Dec 2020 requirement is specific to those people who bought EV's worth more than €50k back in 2017/2018.... they are fully exempt from BIK to the full value of the car upto Dec 2020.

When they then introduced the €50k cap they introduced the first paragraph into the Finance Act and that specifically says Dec 2022.


Full text showing all the context is also here and I'd imagine the Chartered accountants would have it correct...
https://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/sec0121.html

The question 100% was not about a car bought in 2018, we were looking to make some available this year (2021) and this was the answer we were given.

That doc you've linked to is an excellent find though and backs up what was in the Finance Bill etc. The Revenue site must be wrong, but as I say if a company asks them about it they will be told they cannot 0% rate an EV given to somebody today. They might be wrong, but it's the advice finance departments are being given!

I'll send them on that document, I've also emailed the Minister and the SEAI (as they state the exemption is available on their site) to see if they can clarify it.

drunkmonkey

So you can buy one and get the 0% bik still, I'm thinking of changing to a longer range ev and I'd like to keep the 0% BIK.

Zenith74

drunkmonkey wrote: »

So you can buy one and get the 0% bik still, I'm thinking of changing to a longer range ev and I'd like to keep the 0% BIK.

I'll report back if I hear more, in the meantime I'd be taking advice from the company accountant in writing on it. I'd imagine they'll look at the tax code and guidance notes and determine that you would be eligible for the 0%. However if they asked Revenue via the enquiry system, based on our experience they'd be told you are not eligible. I'm sure the tax code takes precedence, but I'd let the accountant make that call!

cubix

Hoping someone in a similar situation will know the below answers. Thinking of buying a Niro-E as a company car.

From what I can see as the car is less than €50K based on OMV so its BIK exempt. Is that for the life time the company owns the car or only a set period

Based on the value of this car (approx €39K) is all of the 39K vat reclaimable as I thought I read somewhere there was a cap of €24K regardless of the total value of the car

Zenith74

cubix wrote: »

Hoping someone in a similar situation will know the below answers. Thinking of buying a Niro-E as a company car.

From what I can see as the car is less than €50K based on OMV so its BIK exempt. Is that for the life time the company owns the car or only a set period

Based on the value of this car (approx €39K) is all of the 39K vat reclaimable as I thought I read somewhere there was a cap of €24K regardless of the total value of the car

Answers to those questions are discussed in the last few posts in the thread if you look up.

In short though, no not the lifetime of the car, the BIK exemption expires 2022-12-31. Also some debate over whether a car bought now would even be eligible.

I think only a fifth of the VAT is reclaimable by the way, not the whole lot!

You may also make use of the Accelerated Capital Allowance scheme if your company pays corporation tax.

drunkmonkey

You can reclaim 20% of the vat if you use it for more than 60% business. You also have the accelerated capital allowance on 24k.
If it's under 50k should be no bik until at least 2023 but there's a bit of grey area if you read the last few posts.
You need to keep it 2yrs for the vat and acc.

cubix

Zenith74

drunkmonkey wrote: »

Deloitte says the same thing and it was published this year..

−New rules to be introduced from 1 January 2023 in relation
to company vehicles
−Will apply 5 different categories depending on Co2 emissions
−Calculates the BIK based on the category of the vehicle and
the business mileage
−BIK charge will be calculated at between 9% and 37.5%
−Currently calculated at between 5% and 30%
−Exemption for electric vehicles will be abolished

There’s no mention in the Deloitte wording of it no longer being based on the original market value of the car, their explanation is correct.

The tax code wording is very clear, it’s still going to be the original market value multiplied by a percentage figure. The difference from 2023 is that that percentage figure will be based on CO2 emissions and business mileage, rather than just business mileage.

drunkmonkey

If they keep the original cost price of the car in that regime where's the incentive, battery prices won't have changed a lot by 2023 which will still make EV's expensive compared to petrol/diesel cars.
Just looking at kpmg chart on page 6
Someone doing 25,000km business milage in an EV will attract a bik rate of 22.5%, now even in an EV (without grants) your probably looking at 45k for a car that will do that comfortably.
I'm not seeing any incentive to switch fuel source if they keep the original car value in the mix as the slightly lower bik rate will be offset by the higher purchase price of the car.