BIK on EVs.

BoatMad

I see it's now been extended from 1 to 3-5 years by pascal donoghue

Also the info graphic from DCCAE also mentions" toll reductions " so we may see something on this !!
Looks good

kop-end

Well that certainly makes the budget announcements seem a littler better....

https://www.dccae.gov.ie/documents/Electric%20Vehicle%20Incentive%20Infographic.pdf

unkel

So it's official now!

More fast chargers and less tolls. Sweet

BoatMad

unkel wrote: »

So it's official now!

More fast chargers and less tolls. Sweet

Ive not seen any detail re tolls, the LEV taskforce felt the only one that could be easily reduced was the M50.

zoom_cool

Is there a list of Electric Vehicles covered under the new no BIK charges for example is the BMW I3 Rex a option does anybody know?

Shefwedfan

zoom_cool wrote: »

Is there a list of Electric Vehicles covered under the new no BIK charges for example is the BMW I3 Rex a option does anybody know?

Rex is not....electric only...

stesaurus

Rex is as it's electrically driven 100%

zoom_cool

So there is no official document from Revenue yet? Where are you getting your information from? thanks

ELM327

zoom_cool wrote: »

So there is no official document from Revenue yet? Where are you getting your information from? thanks

There was a document from the minister posted here not so long ago with the exact text.
I forget the exact wording but in essence it was that the vehicle must derive its power/propulsion from a 100% electric drivetrain. IE the limiting factor is the the forward motion must not be connected to an ICE. I think the i3 rex meets that definition.

zoom_cool

ELM327 wrote: »

There was a document from the minister posted here not so long ago with the exact text.
I forget the exact wording but in essence it was that the vehicle must derive its power/propulsion from a 100% electric drivetrain. IE the limiting factor is the the forward motion must not be connected to an ICE. I think the i3 rex meets that definition.

Thanks ELM327 does anybody have a link to the document .

KCross

zoom_cool wrote: »

Thanks ELM327 does anybody have a link to the document .

Maybe read this thread...
https://www.boards.ie/vbulletin/showthread.php?t=2057799304

And some more stuff in his budget speech if you want to read that
https://www.dccae.gov.ie/en-ie/news-and-media/speeches/Pages/Minister-Denis-Naughten-announces-details-of-Department's-2018-budget.aspx

The main bits...

I have secured a doubling of the budget next year to €10 million to incentivise the use of electric vehicles. New grants to support the installation of home charge points will be available from the 1st of January for new and second-hand electric cars; there will be a 0% rate of benefit in kind for electric vehicles for one year as an interim measure while a review of benefit in kind on vehicles will take place in the meantime.

Additional funding will be provided to support the provision of public charging with an increase on the number of rapid chargers. I also intend to launch a new Electric Vehicle Public Awareness Campaign to drive uptake.

It will include an awareness campaign, a public driver experience roadshow, public sector and commercial fleet trials, and an electric car sharing programme.

The full finance bill is here:
https://data.oireachtas.ie/ie/oireachtas/bill/2017/115/eng@initiated/b11517d.pdf

The text you are after is this...

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

zoom_cool

Thanks there is alot of good information there.

zoom_cool

I am now seriously thinking of a BMW i3 Rex 94ah thanks again for your help.

Mc-BigE

"electric vehicle’ means a vehicle that derives its motive power exclusively from an electric motor"

this guy on youtube is saying the BMW 530e is 0% BIK, surely that is wrong?(hoping its not)

he does make a valid point about business users not able to claim the vat on Petrol for a company car

https://youtu.be/cDlglzdDMAo

fast forward to about 5 minutes in

KCross

Mc-BigE wrote: »

"electric vehicle’ means a vehicle that derives its motive power exclusively from an electric motor"

this guy on youtube is saying the BMW 530e is 0% BIK, surely that is wrong?(hoping its not)

he does make a valid point about business users not able to claim the vat on Petrol for a company car

https://youtu.be/cDlglzdDMAo

fast forward to about 5 minutes in

Fairly sure he is wrong. The engine in the 530e is not a range extender like the i3. It is connected to the wheels so it would fail the "exclusively" element of the text.

Mc-BigE

i'm sure BMW Ireland and every other plug-in hybrid manufacturer in ireland are dissecting the governments document to see if the word "exclusively" means something like "exclusively for 30 miles or more on EV power"

lol

air

This could become one like the N1 commercials where loads of people are driving them and paying the "van" rate of BIK.

ELM327

My opinion on the wording is regardless of what powers the battery (eg onboard generator included), once the traction is powered exclusively from electric motors then it's eligible
Once the ICE is not connected to the wheels.

KCross

ELM327 wrote: »

My opinion on the wording is regardless of what powers the battery (eg onboard generator included), once the traction is powered exclusively from electric motors then it's eligible
Once the ICE is not connected to the wheels.

I'd agree, so that would rule out nearly all hybrids and PHEV's including the 530e..... yes?

Basically, series hybrids (i3) would get the 0% BIK but parallel hybrids(530e, Toyota hybrids etc) would not.

zoom_cool

Why couldn't the government be more clear on this it's typical :-)

ELM327

KCross wrote: »

I'd agree, so that would rule out nearly all hybrids and PHEV's including the 530e..... yes?

Basically, series hybrids (i3) would get the 0% BIK but parallel hybrids(530e, Toyota hybrids etc) would not.

IMO Yes it really only includes real BEV/BEVx and not compliance PHEV.

grogi

Sounds like any full series hybrid qualifies - so e-Power Nissan Hybrid would qualify as well?

ELM327

grogi wrote: »

Sounds like any full series hybrid qualifies - so e-Power Nissan Hybrid would qualify as well?

Again, and we are only guessing here, yes I would guess it would due to the wording and that it derives its traction 100% from an electric motor.

thierry14

grogi wrote: »

Sounds like any full series hybrid qualifies - so e-Power Nissan Hybrid would qualify as well?

They would sell a ton of them here

Drives like an EV With instant power but runs on petrol

Perfection

Could someone give me the plain English version of this - I am a total novice and glaze over when our accountant talks about BIK (and just about anything else).

We have a small business and work from home. We don't have a sales fleet or anything so if we bought a car through the company it would be a pure perk - i.e. no particular use to the business. Is that allowed?

Practically speaking, how does it work? You buy a car through the company and it is treated as an asset - but I suppose when you sell it (in, say, three-to-five years) you have to pay this to the company?

grogi

Deleted User wrote: »

Could someone give me the plain English version of this - I am a total novice and glaze over when our accountant talks about BIK (and just about anything else).

We have a small business and work from home. We don't have a sales fleet or anything so if we bought a car through the company it would be a pure perk - i.e. no particular use to the business. Is that allowed?

Yes. That's exactly why BIK was introduced. An asset is given by the company and can be used privately, thus an additional tax is required.

Practically speaking, how does it work? You buy a car through the company and it is treated as an asset - but I suppose when you sell it (in, say, three-to-five years) you have to pay this to the company?

Yes. Or first transfer it to the individual and pay income tax on the transferred of asset.

Thanks a lot grogi.

Bonus question, if I may: Can you buy a second-hand car or is this an incentive to buy new EVs?

air

Doesn't need to be new.
You'll also have to pay corporation tax on any money used to buy the vehicle, but on the plus side you can depreciate it within the company too.

PickYourName

zoom_cool wrote: »

Why couldn't the government be more clear on this it's typical :-)

As has been quoted already: ""electric vehicle’ means a vehicle that derives its motive power exclusively from an electric motor"

I think I'd struggle to come up with a form of words that could be clearer: your comment is more than a little unfair.

"Motive power" is the power that makes the car move. All hybrids and plug-in hybrids can use their ICE engines to move the car when the battery is empty, so are not included according to the definition.

The range-extender ICE used in the BMW i3 does not use its power to move the car, rather it's used to charge the battery. Hence it is included according to the definition, as motive power is exclusively electric.

The definition is clear and unambiguous and can be applied easily to every car on the market to determine if it is covered or not.

BoatMad

The clear intention in the BIK concession was it only applies to BEVs and not hybrids , i.e. These cars that " exclusively " derive their motor power from an electric motor. The I3 Rex is a BEV

The wording is clear and anything else is wishful thinking.

Supports for hybrids will continue to be scaled back and phased out over the next few years.

BoatMad

Deleted User wrote: »

Could someone give me the plain English version of this - I am a total novice and glaze over when our accountant talks about BIK (and just about anything else).

We have a small business and work from home. We don't have a sales fleet or anything so if we bought a car through the company it would be a pure perk - i.e. no particular use to the business. Is that allowed?

Practically speaking, how does it work? You buy a car through the company and it is treated as an asset - but I suppose when you sell it (in, say, three-to-five years) you have to pay this to the company?

For BIK to apply , the car must be a company asset bought within the company and owned by the company, for sole traders different rules apply . It can be new of 2nd hand

It is then provided for your use , there is NO requirement for business miles or business use.

You cannot own the car in your own name, hence "you " cannot sell the car , the company sells th car and recovers any value.

Note that you cannot have a company pay you to purchase a car in your own name, even by way of salary sacrifice, that's treated as income and taxed Under income tax rules.

So in your case the BIK concession is an enormous benefit , because it effectively allows you to get the use of a car at gross salary rather then net salary costs.

zoom_cool

PickYourName wrote: »

As has been quoted already: ""electric vehicle’ means a vehicle that derives its motive power exclusively from an electric motor"

I think I'd struggle to come up with a form of words that could be clearer: your comment is more than a little unfair.

"Motive power" is the power that makes the car move. All hybrids and plug-in hybrids can use their ICE engines to move the car when the battery is empty, so are not included according to the definition.

The range-extender ICE used in the BMW i3 does not use its power to move the car, rather it's used to charge the battery. Hence it is included according to the definition, as motive power is exclusively electric.

The definition is clear and unambiguous and can be applied easily to every car on the market to determine if it is covered or not.

Thanks for clear it up. I will be good to look for a BMW I3 Rex in the new year.

Water John

So for a VAT registered company, what would be the net cash price of a 30Kw Leaf or Ioniq? To put bones on this.

BoatMad

Water John wrote: »

So for a VAT registered company, what would be the net cash price of a 30Kw Leaf or Ioniq? To put bones on this.

You can't claim VAT back for a non commercial vehicle, and by the way , does the SEAI purchase incentive grant of 5k, apply to companies ??. I would argue it shouldn't

PickYourName

Water John wrote: »

So for a VAT registered company, what would be the net cash price of a 30Kw Leaf or Ioniq? To put bones on this.

Net price is same as actual price, same as anyone else pays.

The benefit - which is potentially huge - is in the zero BIK paid by the employee.

Taking the simplest example:

Case 1: Company pays employee a bonus of €60k (lucky employee!). Employee is on higher rate of tax, so roughly half of this goes in tax (the actual marginal rate is close enough to 50%), and they use the €30k to buy a car. So, to put the employee in a new car costing €30k has cost their cmployer €60k.

Case 2: Company buys a car for €30k and gives it to employee for their full-time use. Right now, the employee will pay BIK tax on it, which assuming there's no actual business mileage works out pretty much the same as case 1: the employee will have to earn €30k more to pay for the BIK tax. So, to put the employee in a new car has still cost their cmployer €60k (€30k for the car, and €30k gross income to enable to employee to pay the tax on the BIK).

Case 3: From next year. company buys an electric car for €30k and gives it to employee for their full-time use. Employee gets the car, but has no further tax to pay.

Note: I've assumed the car is kept for 3 years. Also, I'm well aware that in practice, company cars are more likely to be leased. However, the net results are pretty much the same regardless of how it is structured: you can't escape the marginal tax rate (which is roughly 50% for people on average wages).

The BIK concession is very large for those who can avail of it. Personally, I think once this is widely recognised it will definitely achieve the objective of kick starting a much larger market for EVs.

Water John

Worker gets an EV car, not a 60K bonus. And, they can run it for peanuts.

Has real game changing potential. Now put a fast chargers in every town about 20 miles apart. Don't mind if they charge a reasonable fee for the leccie.

BoatMad

Water John wrote: »

Worker gets an EV car, not a 60K bonus. And, they can run it for peanuts.

Has real game changing potential. Now put a fast chargers in every town about 20 miles apart. Don't mind if they charge a reasonable fee for the leccie.

There are two major fallacies

Companies owning large fleets of cars , has implications for balance sheets, corporation tax and lending issues.

Secondly many workers don't want or cant afford a new car , they want income instead.

The net effect will be muted and will only apply to companies where policy was to offer a company car anyway. BIK never had implications for a company.

The community that will benefit will be largely those availing of low business mile perk company cars , which till now they may have run their own on mileage allowances.

Hence small company proprietary directors and large company executives that already have company car " allotments " as part of their contract and perks of their grade, the repmobile will largely remain ice for now

Note the situation for the company is identical as before , company buys car for 30 k and is available to the employee. It never cost the company 60k in any scenario.

PickYourName

Water John wrote: »

Worker gets an EV car, not a 60K bonus. And, they can run it for peanuts.

Exactly, the case 1 and case 2 examples were to show the comparison with non-EV cars. It's not imediately obvious without expressing it in the form of the examples, but for most people the benefit of the concession is equal to the cost of the car.

BoatMad

PickYourName wrote: »

Exactly, the case 1 and case 2 examples were to show the comparison with non-EV cars. It's not imediately obvious without expressing it in the form of the examples, but for most people the benefit of the concession is equal to the cost of the car.

Companies paying bonus do not substitute these for company cars. Firstly in the 60 k bonus , you own the resulting net asset , free to do what you like

You do not own a company car and you derive no residual value from it.

It's not as simple a corporate decision as you think

PickYourName

BoatMad wrote: »

Note the situation for the company is identical as before , company buys car for 30 k and is available to the employee. It never cost the company 60k in any scenario.

I understand that, but it's not what I was saying.

To try and state it more clearly:

If Joe Soap wants to buy a car for €30k, they have to earn about €60k, assuming a marginal tax rate of 50%. You could argue that it should be at their total tax rate rather than the marginal one, which is why I used the term "bonus" in the example: something on top of what they already have. So, the company has to pay out €60k to put Joe in the €30k car.

Now, from next year, for an EV, the company has to pay out half that to have Joe Soap sitting in the same €30k car.

I'd agree with you that it is mostly owner managers who will benefit from this, rather than those using company cars for actual business use, where it will have much less of an impact. However, there are very large numbers of these. Most would never even have considered company cars before now, as they don't make much financial sense with the current BIK regime. It is precisely those people who will view the concession in the terms I describe: they can all of a sudden save the cost of a new car.

PickYourName

BoatMad wrote: »

Companies paying bonus do not substitute these for company cars. Firstly in the 60 k bonus , you own the resulting net asset , free to do what you like

You do not own a company car and you derive no residual value from it.

It's not as simple a corporate decision as you think

It is if you're the owner of the company you work for and you'd like a new car: it's a no brainer.

grogi

PickYourName wrote: »

I understand that, but it's not what I was saying.

To try and state it more clearly

Let's put it in simple words:

Joe earns €60k gross. He can:
- get €30k cash
- or get €15k cash (50% of €30k) and an EV worth €30k.


I am not sure though if the BIK exemption applies when the ownership of the asset is transferred, or only when ownership of the vehicle remains within the company, but it is used for private purposes.

PickYourName

grogi wrote: »

Let's put it in simple words:

Joe earns €60k gross. He can:
- get €30k cash
- or get €15k cash (50% of €30k) and an EV worth €30k.

That's another way of looking at it OK, but it's not the calculation most would do.

The person this most affects is the owner manager who does next to no business mileage.

Their thinking will be along the lines of the following:

Say they earn €70k, but there's a €100k sitting in the company. This is a very common scenario: owner managers paying thelselves less than they could otherwise do because they don't like the fact half of it goes to Revenue.

They want a new car. From next year, they can buy a €30k EV and it will cost the company €30k.

Or, they could buy a non-EV €30k car, but it will cost the company twice that (€30k for the car, and an extra roughly €10k/annum over three years to pay for the BIK tax that will be owed). If they keep the car longer than three years, it'll cost them even more.

There are many, many people who will do this calculation and come to the same conclusion: this is a huge concession.

BoatMad

PickYourName wrote: »

I understand that, but it's not what I was saying.

To try and state it more clearly:

If Joe Soap wants to buy a car for €30k, they have to earn about €60k, assuming a marginal tax rate of 50%. You could argue that it should be at their total tax rate rather than the marginal one, which is why I used the term "bonus" in the example: something on top of what they already have. So, the company has to pay out €60k to put Joe in the €30k car.

Now, from next year, for an EV, the company has to pay out half that to have Joe Soap sitting in the same €30k car.

I'd agree with you that it is mostly owner managers who will benefit from this, rather than those using company cars for actual business use, where it will have much less of an impact. However, there are very large numbers of these. Most would never even have considered company cars before now, as they don't make much financial sense with the current BIK regime. It is precisely those people who will view the concession in the terms I describe: they can all of a sudden save the cost of a new car.

Your example really only applies to small company owners. Where essentially they can split salary against company costs.

These are the majority benefit from this concession. So assuming the company can afford the car it is now a significant tax benefit.

There goes the commercial jeep market .... poof

My local dealer already has his demo leaf plastered with big 0% BIK messages in anticipation

grogi

PickYourName wrote: »

Say they earn €70k, but there's a €100k sitting in the company. This is a very common scenario: owner managers paying thelselves less than they could otherwise do because they don't like the fact half of it goes to Revenue.

If money stays within the business, corporate tax must be paid on that. It is much more common practice to pump it towards a pension plan, that could be accessed when needed (and relevant taxes paid at that moment).

PickYourName

grogi wrote: »

I am not sure though if the BIK exemption applies when the ownership of the asset is transferred, or only when ownership of the vehicle remains within the company, but it is used for private purposes.

It's only BIK if the asset remains with the company.

If the concession is removed at the end of three years, there are a few options:

- company sells the car, and it all comes to an end.
- company sells the car to the employee at its then market value (paid for out of taxed income)

In practice, however, the car is likely to be leased, and it's never actually owned by either the company or employee.

PickYourName

grogi wrote: »

If money stays within the business, corporate tax must be paid on that. It is much more common practice to pump it towards a pension plan, that could be accessed when needed (and relevant taxes paid at that moment).

Known, understood and agreed.

This isn't necessarily what people want to do, though: check out all the queries around "how do I get profits out of a company without paying tax?" on here and elsewhere.

grogi

PickYourName wrote: »

Known, understood and agreed.

This isn't necessarily what people want to do, though: check out all the queries around "how do I get profits out of a company without paying tax?" on here and elsewhere.

People, in general, don't want to pay taxes...

slicedpanman

Ok guys I'm one of those small company owners (myself and the missus company directors in 2 person self employed co) possibly in the market for a car next year...

I really get the point of spending 30k on a car and effectively costing 15k to us. What I'm interested in is after 3 years (assuming bik is gone for all 3) what's the tax/cost implications of selling the car to ourselves?

Assuming it will have to be a realistic market value after 3 years? What kind of depreciation would be allowed/acceptable?

Also on tax/insurance for the company car... as owned by co does co have to pay tax/insurance/servicing?

If I lost 3 years of insurance in my own name I'd have to factor that into calculations.

Intention is to buy a car (new or second hand) and keep it for 10+ years

air

I don't see any issue registering the vehicle in the name of a director so long as all the accounts are in order.

If you dispose of it (to yourself or someone else) after 3 years you'll be liable for corporation tax on the remaining value that year.

slicedpanman

air wrote: »

I don't see any issue registering the vehicle in the name of a director so long as all the accounts are in order.

If you dispose of it (to yourself or someone else) after 3 years you'll be liable for corporation tax on the remaining value that year.

Walking through the figures then;
Let's say 30k out of the co, co pays tax and maintenance for 3 years then sells car to me.
Reasonable 50% depreciation after 3 years, so I put 15k back into my co and take ownership of car.

But I need to pay CT out of co on remaining value: what's remaining value in that case? 15k? And what rate of CT? 12.5%? Or the 25% non trading rate?