Finance Bill published - BIK clarified

BobbyBingo

The finance bill has just been published. A quick scan reveals the BIK situation.

Section 7 deals with BIK on Electric Vehicles. An EV is, it says:-

"‘electric vehicle’ means a vehicle that derives its motive power exclusively from an electric motor;”,

- to me, this means that the BIK exemption will only apply to BEVs and not PHEVs etc

It also says that BIK will not apply to the "electric charging of vehicles, where all the employees and directors of that body corporate can avail of the facility"

And then the most important piece:-
no amount shall be treated as emoluments of the employment where the car provided is—
(I) an electric vehicle, and
(II) provided during the period 1 January 2018 to 31 December 2018.”,

So no BIK on EVs for 2018. 'During the period' though - what do you think ? Does this mean that if I have an EV now from my Company then it will become non-BIKable in 2018 or does it mean I must be supplied with an EV in 2018 for it to be non-BIKable ?

Presumably will pass through the Dail and be enacted.

B

goz83

I would say "B". If the BEV was provided today until the end of 2020, you would still have it provided for the period of Jan -Dec 2018, no?

BobbyBingo

Assuming by 'B' you mean this option :if I have an EV now from my Company then it will become non-BIKable in 2018 - then I agree too. Badly worded perhaps, but I 'think' this is what they are getting at..

Calahonda52

is there any mention of it needing to be a new car?

cros13

Calahonda52 wrote: »

is there any mention of it needing to be a new car?

No.

Motive power exclusively from an electric motor would allow BMW to sell the REx i3 and Nissan to sell the Note e-power as 0% BIK from 2018.
Both meet that definition.

unkel

The way I interpret this is:

If the EV is given to the employee during 2018 (so the employee did not have that car before 01/01/2018), then the EV is BIK free (for however long the employee keeps it, even if this is 3, 4, 5, etc. years)

la ultima guagua

unkel wrote: »

The way I interpret this is:......

If so, then a golden budget for Tesla

cros13

unkel wrote: »

The way I interpret this is:

If the EV is given to the employee during 2018 (so the employee did not have that car before 01/01/2018), then the EV is BIK free (for however long the employee keeps it, even if this is 3, 4, 5, etc. years)

I disagree, for payroll purposes our accountants definitely interpret it as applying only for 2018. It's not the car that incurs the BIK... it's the use of the car.

BobbyBingo

cros13 wrote: »

I disagree, for payroll purposes our accountants definitely interpret it as applying only for 2018. It's not the car that incurs the BIK... it's the use of the car.

I believe that you are indeed correct. In the explanatory note to the Bill it states:-

It provides a benefit-in-kind exemption for cars where an employer
provides an employee or a director with a car that derives its motive power
exclusively from an electric motor. The exemption is available from 1
January 2018 to 31 December 2018.

B

Shefwedfan

unkel wrote: »

The way I interpret this is:

If the EV is given to the employee during 2018 (so the employee did not have that car before 01/01/2018), then the EV is BIK free (for however long the employee keeps it, even if this is 3, 4, 5, etc. years)

I contacted our lease company.....

There take is I get BIK free for 2018, then in 19/20/21 I pay BIK as normal

I was thinking of taking the car and hoping the BIK would stay.....of course at the moment they cannot actually quote the car because it is outside of there depreciation calculator What did I say day of budget?

BobbyBingo

Shefwedfan wrote: »

then in 19/20/21 I pay BIK as normal

You won't necessarily pay it as normal from 2019 onwards. They intend reviewing BIK on motor vehicles. On the day, the Minister said : "This will be introduced for a period of one year to allow time for a comprehensive review of BIK on motor vehicles"

B

Dardania

BobbyBingo wrote: »

Shefwedfan wrote: »

then in 19/20/21 I pay BIK as normal

You won't necessarily pay it as normal from 2019 onwards. They intend reviewing BIK on motor vehicles. On the day, the Minister said : "This will be introduced for a period of one year to allow time for a comprehensive review of BIK on motor vehicles"

B

That's how I understood it too. Some of the posters here are upset at the lack of absolute certainty this post 2018 review presents...

Shefwedfan

BobbyBingo wrote: »

You won't necessarily pay it as normal from 2019 onwards. They intend reviewing BIK on motor vehicles. On the day, the Minister said : "This will be introduced for a period of one year to allow time for a comprehensive review of BIK on motor vehicles"

B

I know, that is why I said

I was thinking of taking the car and hoping the BIK would stay

BobbyBingo

Dardania wrote: »

That's how I understood it too. Some of the posters here are upset at the lack of absolute certainty this post 2018 review presents...

Understandably I suppose, as a car purchase is typically longer than a year. Having said that I'm going to take the gamble myself and hopefully come next October we'll hear Paschal or whoever the Minister of the day say "....and I've decided to extend the scheme for one more year...." - otherwise there'll be a lot of EVs coming onto the market in Jan 19! Mine included!

B

kop-end

The lack of BIK commitment past 2018 is what will kill this initiative before it starts. Here is my example:

Currently: have a company car, leased for 3 years, due for renewal April 2018,
€28k value, drive under 30,000 business miles per year so pay BIK at
30 % for 1/3 OMV per year.

Option A: Jump into a similar value EV, Ioniq or new Leaf, take advantage of
0% BIK for 8 months... BUT.. leave myself open for the 0% BIK to be
scrapped next October, left with 30 months on an EV paying BIK !!

Option B: Play it safe and just replace exiting vehicle with similar 181 diesel
and carry on with zero risk

Shefwedfan

kop-end wrote: »

The lack of BIK commitment past 2018 is what will kill this initiative before it starts. Here is my example:

Currently: have a company car, leased for 3 years, due for renewal April 2018,
€28k value, drive under 30,000 business miles per year so pay BIK at
30 % for 1/3 OMV per year.

Option A: Jump into a similar value EV, Ioniq or new Leaf, take advantage of
0% BIK for 8 months... BUT.. leave myself open for the 0% BIK to be
scrapped next October, left with 30 months on an EV paying BIK !!

Option B: Play it safe and just replace exiting vehicle with similar 181 diesel
and carry on with zero risk

This was how I explained it before. The cost of the Electric car is more expensive to diesel equivalent. Also you get VAT back on the diesel going into the car....

0% BIK is a hell of a risk if they bring it back in 2019. I need to take the car over 4 years.

Also the depreciation is higher on electric cars which means the monthly cost is higher. As I posted above, my lease company cannot quote me at the moment for electric car because of depreciation. When I asked they offered me hybrid, then told me I would be doing too much mileage for electric car. Even when I pointed out I have a current electric car they sent me a list of questions. The request is now with the finance department to see if they can get around it

kop-end

Shefwedfan wrote: »

This was how I explained it before. The cost of the Electric car is more expensive to diesel equivalent. Also you get VAT back on the diesel going into the car....

0% BIK is a hell of a risk if they bring it back in 2019. I need to take the car over 4 years.

Also the depreciation is higher on electric cars which means the monthly cost is higher. As I posted above, my lease company cannot quote me at the moment for electric car because of depreciation. When I asked they offered me hybrid, then told me I would be doing too much mileage for electric car. Even when I pointed out I have a current electric car they sent me a list of questions. The request is now with the finance department to see if they can get around it

I never even factored in the depreciation of an EV being greater than that of a normal, thanks for that
Please let me know how you get on with your decision..

unkel

kop-end wrote: »

I never even factored in the depreciation of an EV being greater than that of a normal

And maybe you wouldn't have too. Sure, Leaf mk1 depreciated more than similar class ICE and so do probably overpriced (in the Irish market) EVs like i3 and eGolf, but in general I would think it safe to assume that a 2018 budget EV will NOT depreciate more than ICE

It's already proven that Tesla Model S in the UK is the least depreciating cars of all cars (including any ICE cars)

Ioniq EV or Leaf mk2 will not depreciate more than €25k diesel family size cars. Mark my words.

Dardania

Shefwedfan wrote: »

kop-end wrote: »

The lack of BIK commitment past 2018 is what will kill this initiative before it starts.   Here is my example:

Currently:  have a company car, leased for 3 years, due for renewal April 2018,
                €28k value, drive under 30,000 business miles per year so pay BIK at
                30 % for 1/3 OMV per year.

Option A:   Jump into a similar value EV, Ioniq or new Leaf, take advantage of
                0% BIK for 8 months... BUT.. leave myself open for the 0% BIK to be  
                 scrapped next October, left with 30 months on an EV paying BIK !!

Option B:   Play it safe and just replace exiting vehicle with similar  181 diesel
                and carry on with zero risk

This was how I explained it before. The cost of the Electric car is more expensive to diesel equivalent. Also you get VAT back on the diesel going into the car....

0% BIK is a hell of a risk if they bring it back in 2019. I need to take the car over 4 years.

Also the depreciation is higher on electric cars which means the monthly cost is higher. As I posted above, my lease company cannot quote me at the moment for electric car because of depreciation. When I asked they offered me hybrid, then told me I would be doing too much mileage for electric car. Even when I pointed out I have a current electric car they sent me a list of questions. The request is now with the finance department to see if they can get around it

I asked you this on the other thread, which you didn't answer, so I ask again:

In listing all of the negatives with the BIK situations on EVs, are you working into your sums that the actual cost of running (the motive power, t move the wheels) is far cheaper than a diesel?
Does that impact your sums to any degree?

Shefwedfan

Dardania wrote: »

I asked you this on the other thread, which you didn't answer, so I ask again:

In listing all of the negatives with the BIK situations on EVs, are you working into your sums that the actual cost of running (the motive power, t move the wheels) is far cheaper than a diesel?
Does that impact your sums to any degree?

I thought I did.....I missed it as thread went off track :-)

When I get a company car if I go diesel I get a fuel card. So I get VAT off diesel. So the price is diesel is a lot lower than normal price. So this reduces the cost per km.

My current company has chargers at one office and not any of the others. The office with charge point I use maybe once a week. So I can charge up for free at that point but rest of the time I will be charging at home.

Then take in the higher cost of the car per month because the buy price is higher. Also the depreciation is higher.

At the moment unless free BIK for the 4 years I would end up out of pocket by using electric car versus diesel car.

Dardania

Dardania wrote: »

I asked you this on the other thread, which you didn't answer, so I ask again:

In listing all of the negatives with the BIK situations on EVs, are you working into your sums that the actual cost of running (the motive power, t move the wheels) is far cheaper than a diesel?
Does that impact your sums to any degree?

The cost to drive 160,000 Kms based on my average efficiency of 19 Kwh/100 Kms int he Leaf with the foot down would be 1,825 Euro's if charging on night rate electricity costing 6 C/kwh.

This requires an average of 30,418 Kwh.

More if a mix of peak charging and less again if using public chargers which have been free since 2011.

I went on PCP so depreciation is Nissan's problem.

jimmycrackcorm

kop-end wrote:

The lack of BIK commitment past 2018 is what will kill this initiative before it starts. Here is my example:

Not necessarily. You'd have to pay BIK on an alternative car for a year, so it's still worth something.

Bigus

BobbyBingo wrote: »

You won't necessarily pay it as normal from 2019 onwards. They intend reviewing BIK on motor vehicles. On the day, the Minister said : "This will be introduced for a period of one year to allow time for a comprehensive review of BIK on motor vehicles"

B

I'd Bet EVs will stay bik free for more than one year especially after the citizens assembly report back.

Dardania

Shefwedfan wrote: »

Dardania wrote: »

I asked you this on the other thread, which you didn't answer, so I ask again:

In listing all of the negatives with the BIK situations on EVs, are you working into your sums that the actual cost of running (the motive power, t move the wheels) is far cheaper than a diesel?
Does that impact your sums to any degree?

I thought I did.....I missed it as thread went off track :-)

When I get a company car if I go diesel I get a fuel card. So I get VAT off diesel. So the price is diesel is a lot lower than normal price. So this reduces the cost per km.

My current company has chargers at one office and not any of the others. The office with charge point I use maybe once a week. So I can charge up for free at that point but rest of the time I will be charging at home.

Then take in the higher cost of the car per month because the buy price is higher. Also the depreciation is higher.

At the moment unless free BIK for the 4 years I would end up out of pocket by using electric car versus diesel car.

You quite well may have, and I just missed it - that other one thread got off course largely!

With my understanding of fuel cards from work, you still pay the BIK on the cost of the diesel (even if the cost is reduced as the company can claim back the VAT) - I remember having it listed as a line item on my wage slip, that I had BIK owing due to fuel costs each month. And of course, the company had to pay the cost of fuel (whatever it was - averaging €10 per 100km or so?) - compare that with Mad_Lad's motive power cost of closer to €1.14 per 100km at night rate, or say €3 per 100km if you were to charge at work. Big difference...

It seems to me, from an employers perspective, it might be cheaper to provide EVs to their staff, bearing in mind the cost of motive power - I do take the point that unknown depreceation may be a risk to some companies on the lease.

I can't see how they'd implement work charging anyway and who'd administer it, whether they'd unload this on the the company accountant or not ?

In work I have to use an access card so I'm sure they can match it to me and calculate the Kwh used.

If you get 2 Euro's worth of electricity how much tax are you liable for ?

la ultima guagua

Deleted User wrote: »

.....If you get 2 Euro's worth of electricity how much tax are you liable for ?

I expect it would depend on your marginal rate

Never mind that, just think of the cost to your employer in admin hours and / or IT systems to keep track of your €2.

If BIK was to be due then I could see employers removing work chargers.




In any event, what is approx cost /kWh for 'leccy for a company that contracts to buy of the order of 5GWh/year ?

( I pick that figure out of thin air - its about what one of my - unexceptional - customers uses )

Shefwedfan

Deleted User wrote: »

I can't see how they'd implement work charging anyway and who'd administer it, whether they'd unload this on the the company accountant or not ?

In work I have to use an access card so I'm sure they can match it to me and calculate the Kwh used.

If you get 2 Euro's worth of electricity how much tax are you liable for ?

At the office we have charger they don't seem to have any pricing system, from what I can see you just plug in and away you go. I have never used but I must try this week drop over and see. It is only a slow charger but I see the people that use that office must have some sort of rota in place as a Golf GTE was plugged in the other day and next thing he moved and Leaf was plugged in......

Dardania

Deleted User wrote: »

I can't see how they'd implement work charging anyway and who'd administer it, whether they'd unload this on the the company accountant  or not ?

In work I have to use an access card so I'm sure they can match it to me and calculate the Kwh used.

If you get 2 Euro's worth of electricity how much tax are you liable for ?

Well, for now, if there's no BIK on work charging, there's no need to administer it.
But in future, if there was BIK on work charging, I could see it being provided as an outsourced service - similar to how some coffee machines in a facility are offered as an administered service to employees, with little badge tags etc. The CRU's decision to allow third party access to ECars IT infrastructure would help with that.
€2 of electricity - if there were BIK on, I'd say discount 13.5% of it for VAT?

It's still a cheap option for people with no home charging. Work place charging should be encouraged.

la ultima guagua

la ultima guagua wrote: »

In any event, what is approx cost /kWh for 'leccy for a company that contracts to buy of the order of 5GWh/year ?

My company pays xx Million per month for leccy ! That's why they said they had no intentions charging for electricity because it wouldn't even register on the bill !

la ultima guagua

Deleted User wrote: »

My company pays xx Million per month for leccy ! That's why they said they had no intentions charging for electricity because it wouldn't even register on the bill !

They have the right idea.
Charging for it would aggravate them and P. off you.
That aside, have you any idea what sort of cost per unit they are buying at ?

la ultima guagua

la ultima guagua wrote: »

They have the right idea.
Charging for it would aggravate them and P. off you.
That aside, have you any idea what sort of cost per unit they are buying at ?

No idea, but they have to build their own power station close by because the Grid in West Dublin can not provide any more power, this is very disturbing.

At certain peak times they have to fire up their own generators so the grid has power ! that's shocking ( pun intended )

Dardania

Deleted User wrote: »

la ultima guagua wrote: »

They have the right idea.
Charging for it would aggravate them and P. off you.
That aside, have you any idea what sort of cost per unit they are buying at ?

No idea, but they have to build their own power station close by because the Grid in West Dublin can not provide any more power, this is very disturbing.

At certain peak times they have to fire up their own generators so the grid has power ! that's shocking ( pun intended )

Hardly Microsoft, as was going around LinkedIn lately about providing their own power station?

I can see winter demand reduction programmes getting more important soon...these data centres are massive energy consumers

Dardania

Dardania wrote: »

Hardly Microsoft, as was going around LinkedIn lately about providing their own power station?

I can see winter demand reduction programmes getting more important soon...these data centres are massive energy consumers

Yes, and highly embarrassing for the country ! it caused a bit of a stir in Redmond !

cros13

la ultima guagua wrote: »

They have the right idea.
Charging for it would aggravate them and P. off you.
That aside, have you any idea what sort of cost per unit they are buying at ?

Likely the bigger portion of the bill is demand pricing not a per unit charge.
Large consumers can also purchase directly either through power purchase agreements or at a spot price.

For smaller companies the usual industrial rate is around 11 cents per unit before any negotiated discounts.

BoatMad

The BIK incentive as undoubtedly mis-handled, in all the discussion I was party to, it was never mentioned as a 1year incentive , but I do know that DofF was very concerned that the incentive would be over subscribed and potentially cause a larger revenue loss then budgeted. My comments to that , were to limit the maximum amount that could be claimed , ie cap the BIK " refund " . Otherwise it's a " tesla " charter

Even as a 1 year incentive ( and I believe it will continue as my understanding is BIK will tailored to disincentivise diesels etc. ) it still is a significant benefit to somebody already in the full BIK exposure with limited business mileage.

unkel

It sounds like a last minute amendment alright that wasn't thought through. Some late night - tired people trying to negotiate? With an unsatisfactory outcome.

kop-end

BoatMad wrote: »

The BIK incentive as undoubtedly mis-handled, in all the discussion I was party to, it was never mentioned as a 1year incentive , but I do know that DofF was very concerned that the incentive would be over subscribed and potentially cause a larger revenue loss then budgeted. My comments to that , were to limit the maximum amount that could be claimed , ie cap the BIK " refund " . Otherwise it's a " tesla " charter

Even as a 1 year incentive ( and I believe it will continue as my understanding is BIK will tailored to disincentivise diesels etc. ) it still is a significant benefit to somebody already in the full BIK exposure with limited business mileage.

Not sure I agree that it is a significant benefit as it stands. A standard 3 year lease with an EV with zero BIK for the full 3 years on the lease would offset my 3 year commitment to 'charging' and 'planning' my journeys, etc.. ( I added comma's for dramatic effect )
Also, the BIK relief will run from this budget to next budget so anybody with new leases from April 2018 onwards will only see 6 month benefit, not 12 months..

BoatMad

kop-end wrote: »

Not sure I agree that it is a significant benefit as it stands. A standard 3 year lease with an EV with zero BIK for the full 3 years on the lease would offset my 3 year commitment to 'charging' and 'planning' my journeys, etc.. ( I added comma's for dramatic effect )
Also, the BIK relief will run from this budget to next budget so anybody with new leases from April 2018 onwards will only see 6 month benefit, not 12 months..

Well anyone with a low mileage business car , managers , directors , company owners, etc often have considerable car purchase budgets and some are already paying considerable BIK

This, at the very least, gives them a one year holiday , the incentive was never targeted at those doing high business mileage.

Charging and " planning " journeys is always over thought by non-EV owners , in reality it's far less of a concern

The big issue is the lack of executive BEV cars in the 40-60k price range.

Also leases in companies run from any date to any date unless specific company policy intervenes and most companies these days are aligned to calander year.

kop-end

BoatMad wrote: »

Well anyone with a low mileage business car , managers , directors , company owners, etc often have considerable car purchase budgets and some are already paying considerable BIK

This, at the very least, gives them a one year holiday , the incentive was never targeted at those doing high business mileage. 1 year is not a minimum, my example is June 2018 renewal on 3 year lease.

Charging and " planning " journeys is always over thought by non-EV owners , in reality it's far less of a concern Agreed, but the new EV driver decides with this 'range anxiety', not with hindsight of an exisiting EV driver

The big issue is the lack of executive BEV cars in the 40-60k price range.

Also leases in companies run from any date to any date unless specific company policy intervenes and most companies these days are aligned to calander year.

Not sure I agree, I work in the industry and we have 8 companies with us who operate on a strict 3 year lease starting from date employee takes first vehicle

BoatMad

kop-end wrote: »

Not sure I agree, I work in the industry and we have 8 companies with us who operate on a strict 3 year lease starting from date employee takes first vehicle

The BIK incentive was not seen as an all encompassing removal of the existing BIK , nor was it seen as applying to everyone in the potential BIK net.

The idea was to focus on certain categories, who currently are most heavily penalised by BIK , that's largely executives with low business mileage and access to significant car purchase budgets. It was not seen as applying to high mileage business users who are only paying small amounts of BIK and at present the range from current EVs isn't sufficient.

Directors and company owners have large amounts of discretion as to how vehicles are financed etc. Cars are regularly traded in without seeing the full loan period ( I know , I did it for years ) companies regularly get settlement figures and trade executive vehicles.

Of course if you get the car mid way through next year , yes of course you only have the remaining period of guaranteed rebate , that's self evident

stesaurus

So Donohoe confirmed BIK will be removed for 3-5 years. Great news on the clarification.

While this relief is provided for an initial period of one year, it is my intention that the zero rate will remain in place for a period of time, a minimum of three to five years, sufficient to incentivise the uptake of electric vehicles

BobbyBingo

That's great news. The 'intention' bit is important - if he's not the minister or in govt, who knows what could happen - but for now, certainly a lot more certainty than what was in the budget speech and subsequent finance bill. Full article here

B

Shefwedfan

stesaurus wrote: »

So Donohoe confirmed BIK will be removed for 3-5 years. Great news on the clarification.

This is excellent....now if I could just get my Lease company to quote me an electric car

I asked the day after budget and still waiting for them to see if they can offer it to me....

la ultima guagua

So, What do ya bet that this very Bank Holiday Monday the Lads in Tesla up in Sandyford are unleashing the mother of all exec car sales campaigns ?

gally74

cna some one explain an example of this, given it is now for 5 years,

if one bough a car new (EC) using this, what is the savings, yr on yr?

Calahonda52

gally74 wrote: »

cna some one explain an example of this, given it is now for 5 years,

if one bough a car new (EC) using this, what is the savings, yr on yr?

What is EC?
It is NOT for 5 years, it's an intention

https://www.irishtimes.com/business/transport-and-tourism/benefit-in-kind-support-for-electric-cars-to-be-extended-1.3273307
“While this relief is provided for an initial period of one year, it is my intention that the zero rate will remain in place for a period of time, a minimum of three to five years, sufficient to incentivise the uptake of electric vehicles,” said Mr Donohoe.

BoatMad

It is NOT for 5 years, it's an intention

When a Finance Minster states an intention in this way, it can be taken as policy

Dardania

BoatMad wrote: »

It is NOT for 5 years, it's an intention

When a Finance Minster states an intention in this way, it can be taken as policy

No it can't. We have a democratic process before policy is enacted

BoatMad

Dardania wrote: »

No it can't. We have a democratic process before policy is enacted

There are several reasons why the finance bill was limited to 2018 on EV BIK, whats clear is the minster intention to extend the relief

That should be sufficient for any one to act accordingly

KCross

Dardania wrote: »

No it can't. We have a democratic process before policy is enacted

+1

The govt could collapse at any time and who knows what the next Minister's opinions are and if its not already in law the opinion of the previous minister is just that... his/her opinion.

Having said that, I think this particular item will stay the course even if there was a change in government.