BIK on EVs.

rgfinn

https://www.boards.ie/discussion/comment/118007659#Comment_118007659

Hopefully, but haven’t found any detail so far

Royale with Cheese

Radio silence, doesn't look like there'll be any extension this year at least. I'd take that to mean they still want the current scheme to end in 15 months time unless something changes over the next year.

Keggers74

It is extended…

“Extension of BIK exemption for EVs

The BIK exemption for battery electric vehicles will be extended out to 2025 with a tapering effect on the vehicle value. This measure will take effect from 2023. For BIK purposes, the original market value of an electric vehicle will be reduced by €35,000 for 2023; €20,000 for 2024; and €10,000 for 2025.”

rocketspocket

https://www.boards.ie/discussion/comment/118009323#Comment_118009323

so 2022 - 50K

2023 - 35k

2024 - 20k

2025 - 10K?

the 'will be reduced by ....' confuses me..

niallo27

Hang on, that sounds shocking. So for a 50k id4, I'll be paying bik on 15k in 2023

rocketspocket

https://www.boards.ie/discussion/comment/118009404#Comment_118009404

No - you'll be taxed on as if you had a car with an OMV value of 15K - so likely be 22%(??) of that OR in todays terms - that would be 2340 per year (if you don't meet any mileage thresholds)

Royale with Cheese

Might make sense to hang on to the car for an additional year in 2023 but after that definitely not. I'm just hoping used car prices go back to normal within 2 years so I can easily just sell the car to myself at that point.

niallo27

https://www.boards.ie/discussion/comment/118009433#Comment_118009433

Where are ya getting 2340 from, I am getting 1716 15k X 22% X 52%

rocketspocket

https://www.boards.ie/discussion/comment/118009547#Comment_118009547

Your figures look right if the VRT table has the reduced rate from 2023 Company car bands hasn't changed & as far i know it hasn't, the 2340 is todays cost as i think BIK on EVs greater that the exemption is taxed @ 30%..

Dr. Nick

Thia is the originally proposed new table from 2023, will it change I wonder/

http://www.irishstatutebook.ie/eli/2019/act/45/section/6/enacted/en/html#sec6.

cfingers

Does anybody know where I can find the OMV of the car at the time of purchase? My company bought a second hand 181 ioniq but we don't know what it would have originally cost.

wassie

You could use Revenues VRT calculator (typically used when importing a vehicle). This will provide you with the Open Market Selling Price (OMSP) determined by Revenue, which is the basis for calculating VRT. Note you need the Original OMSP - not the current OMSP (it will be the higher number of the two)

https://www.ros.ie/evrt-enquiry/vrtenquiry.html?execution=e1s4

Wonder will this finish the EV surge we have seen. Most people i talk to won't get a full electric. The 0% was a great incentive and the uptake took off last year in work. I was planning to upgrade in 2023 but definitely wont be now and will sell the car back to myself and get a few more years out of it before i decide to change.

The BIK had a double whammy effect, it increased the uptake in EV cars and if they extended it then it would also increase the second hand EV stock. With the current shortage of second hand cars i would have thought encouraging the second hand market would have been key.

and yes i am biased, but my Kia has a summer range of 420 and a winter range of 350 so i am happy to keep it but i would have traded it in in 2023 if the incentive was still there.

Dr. Nick

https://www.boards.ie/discussion/comment/118009795#Comment_118009795

https://www.simi.ie/en/motorstats/recommended-price-guide

Buz087

https://www.boards.ie/discussion/comment/118009585#Comment_118009585

Don't forgot to deduct the 10% fleet discount (if applicable) from the OMV.....For tax year 2023 and assuming the ID4 is purchased in January '22, the sell price is about €52k. Deduct the fleet discount of 10% which leaves the OMV at €46.8k. Take away the threshold of €35k and the OMV for the purpose of BIK is €11.8k.

In 2023 and for the lowest mileage band for EV, the % BIK is 22.5% which leaves a BIK annual gross amount of €2,655. That is based on the company car driver not contributing anything to the running cost of the car.

What was announced today was probably the most that the Govt was going to offer. There was no way that Pascal was going to give an 0% BIK exemption with the 50k threshold for another 4 years.

I have ordered an EV for January delivery and the BIK saving over the 4 year lease is sizeable when compared to what I am paying now as a low business mileage user. That saving is going straight into my pension as a gross amount. I am delighted with what was announced today.

fafy

The BIK is somewhat confusing.

So if for example the OMV when new in 2021 was say 40k.

What it looks like to me, is as follows:

where someone does zero business mileage and has a company EV car.

2021, 0 BIK as OMV under 50k

2022- as above

2023 35k exempt,BIK =5k (40-35)x 22%, so taxable on €1,100

2024 20k exempt, BIK=20k (40-20)x 22%%, so taxable on € 4,400

2025, 10k exempt, BIK=30k(40-10) x 22%, so taxable on €6,600

Even at the 2025 rates, the maximum tax is about 3.5k in tax/usc/prsi, that doesent sound bad, for a newish car, no monthly repayments , no insurance or motor tax to pay, no servicing, tyres or maintenancr, and employee can charge up at work.

If one bought a new EV today for 40k, it would cost a lot more than 3.5k per year.

In fact, this would encourage people to get newer cars, as paying the same BIK, for a new 40k EV, as a 5 year old EV.

Buz087

https://www.boards.ie/discussion/comment/118011505#Comment_118011505

Exactly, that’s the way I am reading the new measure.

https://www.boards.ie/discussion/comment/118011505#Comment_118011505

what you are forgetting is 2026.

On your basis, i buy a car for 40k in 2024 and lets say the 10k exempt last for a further 3 years.

3 years of paying 6600 amounts to 19800. Cost to company would be 59800.

Lets say roughly 1500 per year on interest if bought through a company loan, loan cost would be 4500 over the 3 years, this is pure guessing at interest. Cost to company is now 64300. if you paid yourself that money it would be €30,864.

So if you sell the car to yourself after 3 years lets say you buy it back off your company for 20k and you pay yourself that straight away you would get €9600 back, the actual cost of the car purchase back in real terms was €10400,

So now over the 3 years the car has actually cost you €41, 264 in real terms money whilst if you bought it personally and got a loan it would cost you 44500, and i reckon you could get a better deal on interest buying it personally.

Only real saving to be had is service, tax and tyre changes, my experience if you are getting the correct insurance is that it costs you slightly more.

My car cost me €45k so my savings are wiped. Then factor in by 2026 it will be 100% BIK taxable. not sure where you are getting the 22% as normal passenger cars are 30%. Yes if you can justify business mileage you can get some back. But to me having to justify business mileage and the headache of having the company own the car isn't worth the hassle when by 2026 the car will be costing you.

I got my car Aug 2020, i will pay the BIK in 2023 and sell the car back to myself by Jan 2024, no savings to be had anymore and its not worth revenue having another stick to beat you with if they want to audit you

Royale with Cheese

Also what EVs are there out there with an original market value of 40k, they'd have to have been on sale for 35k initially. Very little I'd imagine.

I've a Model 3 SR+ and my current personal tax liability on it is around €1100 a year. This will double in 2023 and then double again after that. It will be around €5500 by the final year of the scheme. Yes if you compare what they have here to running a low mileage petrol/diesel car through your company then it's a bit of a saving but the whole point of the structure of how they tax those cars for BIK is that it shouldn't make financial sense for anyone to actually do that.

Buz087

https://www.boards.ie/discussion/comment/118012474#Comment_118012474

That is the problem, the taxation of ICE vehicles for BIK beyond 2025 is going to be a significant financial drain on people if they are high mileage users when compared with the BIK rates today.

What you would expect is that the cost of EV's should drop by then

https://www.boards.ie/discussion/comment/118012551#Comment_118012551

it would be great to know the percentage of EVs out there that are under the BIK incentive.

We all know the BIK 0% party will end, just questioning the rationale here when they want to reach the 1 million mark in 8 years. i woud have thought an extra 3 years of 0% and then the tapering effect. they need to build up the second hand market for EVs, not the silly old leafs but decent 400km range cars. personally i would have upgraded in 2023/2024 but wont be now and if there are thousands like me (which i expect) then thats a lot of second hand EVs that wont be on the market.

wassie

It is inevitable that EV ownership & operating costs will slowly increase (or actually normalise) as incentives & subsidies are tapered off. As we transition the fleet from ICE to EV, the Govt is going to need to replace the revenue (just wait until a user pays charge is introduced to replace lost fuel revenue).

This will also be counterbalanced by ICE ownership & operating costs increasing to encourage the shift to EV. To me its a question of getting the balance right for the Government. ie. a mix of carrot and stick.

Of course I want the EV gravy train to run as long as possible, but also a realist that it cant last...

Buz087

https://www.boards.ie/discussion/comment/118012756#Comment_118012756

Taxation of company vehicles is an easy target and I wouldn't be surprised that post 2025, we will see the BIK on EV's return to similar rates of BIK that we see today. Even though the Govt has published a new system for 2023, the demise of ICE will see the tax take on BIK decline.

It is challenging for the government as they need company EV fleets to end up in the domestic 2nd hand market. I expect to see an increase in company EV usage from 2022 onwards

fafy

https://www.boards.ie/discussion/comment/118012448#Comment_118012448

22 % is the reduced BIK % maximum, on EV’s under 50k, so Employee is saving 8%, as it would be 30% on an ICE vehicle.

Bottom line, if one can get a company EV under 40k, when you take depreciation and all the other ongoing costs into account, its still better than buying it yourself. In my example above depreciation alone, would be much more than 3.5 k a year.

I’d also guess, the additional relief for EV’s may be extended beyond 2025, if we are not meeting targets, then this may need to be relaxed.

I think, the government by their policies, are saying basically, if you have an expensive EV, you don’t get a reduced BIK relief.

So, i understand a basic ID3 Life for example, is still under 40k as the 5k SEAI grant is added back for commercial purchasers ? I could be incorrect on this?

Bit its true there are not that many who come under 40k, but i suspect prices for entry level EV’s, will reduce overtime as battery tech becomes cheaper.

wassie

I would agree - given the high costs of most EVs available before last year, its long being argued that subsidies for Electric Vehicles have favoured the wealthy.

However the logic is an initial stimulus is often needed to generate sufficient demand, so that over time the cost of production is reduced and prices come down to a level afforded by the masses. We appear to be crossing that threshold with most manufacturers now having an 'affordable' EV either on sale or due to be released over the next 18 months and the BIK changes reflect this.

Of course as you say the unknown is the 2030 targets which could influence policy in the future.

https://www.boards.ie/discussion/comment/118012874#Comment_118012874

I take your points, i could not find the max 22%.

what is €3500 a year? 30k (40-10) is €6600 a year. if you hold your car for say 4 years and your company pays 40k for the car originally then the cost to company is €66,400, thats assuming no loans. so actual post tax cost to you in that period is €31,872. if you then put a value of 20k on the car to buy it off the company, then pay yourself the 20k to offset it, you would only come out with €9600, meaning the car personally cost you €10400 to buy off the company. Meaning after 4 years (if they are going to keep the 10k reduction) the car would have cost you €41,872

fafy

The amounts in my example are the Taxable BIK amounts, rather than the nett cost, of additional taxes.

So in the 2025 example, the taxable BIK amount is €6,600, which is subject to

PRSI, (4%)

USC(which could be 4.50 % or 8%), &

PAYE.(40 %)

As the actual amount of tax on the BIK can vary depending on someones individual circumstances, i used €3,500 as a rough guide.

Adding, any taxes due on any BIK, are paid by the Employee, not the Employer, the only exception is, Employers PRSI, which is applicable to the Taxable BIK amount.

mossy464

Is the OMV for BIK purposes the vehicle price plus the VRT?

innrain

https://www.boards.ie/discussion/comment/118039572#Comment_118039572

Yes.

wassie

From Revenue website:

The OMV is the cost of the car, in Ireland, prior to its first registration, including all Irish taxes and duties.

Generally, this is the list price of the vehicle, including Value-Added Tax (VAT) and Vehicle Registration Tax (VRT) at the time of first registration.