BIK on EVs.

Royale with Cheese

I've not really been keeping an eye on this. When did they change the 40k limit for 2023 to 35k?

innrain

https://www.boards.ie/discussion/comment/119703124#Comment_119703124

Finance Act 2021. They rehauling the whole BIK for company cars system.

spakman

I bought my EV through my company - I'm the sole shareholder and employee.

I'm wondering now if it would make more sense for the company to sell the car and I buy/lease a car myself rather than having to pay BIK every year.

Or I buy the car off the company but I can't see how that would make sense, transferring money over and back and paying tax at each stage!

Buddy Bubs

https://www.boards.ie/discussion/comment/119732433#Comment_119732433

It's either on revenue website or citizens info but you might be able to make this work for you.....if an employee contributes to part of the cost of the car then the reckonable amount on which BIK is chargeable is reduced by that amount, not sure if it applies to directors or not but worth looking into .....also for this year you reduce that amount by 50k anyway, next year its 35k

Which EV do you have? Unless it's a very expensive one the BIK should be low until end of 2023 anyway without any further messing around. Have a chat to your accountant anyway

spakman

https://www.boards.ie/discussion/comment/119733008#Comment_119733008

EV was around 40k, didn't realise it was reduced by 50k next year, that means I won't have to pay any BIK next year then?

That's great, it can wait for another year 😀

loopymum

Check the VRT calculator to see the OMSP of your car. Next year bik will be due on OMSP less 35k

eltoastero

https://www.boards.ie/discussion/comment/119735830#Comment_119735830

I think the OMSP for VRT means "Open Market Selling Price" (a reflection of what the car is valued at now) whereas the OMSP used in the BIK calc is "Original Market Selling Price".... so the BIK cost doesn't decrease in line with depreciation on the car. Very helpful that they named these different terms with the same acronym

Buddy Bubs

https://www.boards.ie/discussion/comment/119735742#Comment_119735742

2022 it's reduced by 50k so no BIK

2023 it's reduced by 35k so BIK only on the amount it cost above that, which will be minimal

2024 it's BIK on amount above 20k so thats maybe when you have to start making a decision on what to do

rocketspocket

the OMSP of my ID4 was 63,000 but i paid 70,000 - the BIK is on the purchase value of the car and not the OMSP

wassie

Correct.

When caclulating the cash benefit of the car for BIK purposes, consideration is given to the what is termed the Original Market Value (OMV)

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

https://www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/private-use-company-cars/calculate-value-benefit.aspx

As mentionmed above, OMSP is used for VRT calculation purposes.

fafy

One needs to consider the annual kms as well, if you do a lot of business mileage, the BIK is further reduced. EV’s are class A:

EG For 2023:

Deduct 35 k off OMSP, and apply the percentage below to the balance, to get the taxable amount.

2023 to 2025 EV deductions from OMSP, and the apply percentages above:

If you do no business mileage, or, do less than 26,000 kms, then its the OMSP less the relevant amount for 2023 to 2025 x 22.50 % = taxable amount.

Nett pay deduction is typically about half the taxable amount, if you are on 40 % PAYE.

Spipov

sorry for my possible dumb question. Can i apply for BIK as a sole trader who owns my own company (not limited)? also, how do i apply for BIK? is it when i am buying the car at the dealer? i cant find any information on how to go about this at all anywhere

Buddy Bubs

https://www.boards.ie/discussion/comment/119745455#Comment_119745455

Bik is a tax. You don't apply for it, you declare it and pay it when you are doing a tax return.

I think you're asking about something else you've confused it with. Grants maybe?

Spipov

Possibly. Havent a clue. So i buy the car normally as any normal person and then declare it with revenue when i file? I get the difference or something like that back? Even accountants cant explain this thing to me

wassie

A suitably qualified/chartered Accountant will be able to explain that - its pretty much part of their role as your advisor.

From your comments I would suggest you first need to speak to one to understand your own situation before worrying about BIK & private use of company vehicles.

As for how BIK works, try starting here:

https://www.citizensinformation.ie/en/money_and_tax/tax/income_tax/taxation_of_benefits_from_employment.html

Then go here.

https://www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/what-is-benefit-in-kind/index.aspx

BigGeorge

Looking at getting an EV as a company car but would need to get it before January - have left it all very late.. Have been offered a ex-demo ID3, but an not sure how this would effect the accelerated capital allowances or BIK etc... - anyone got any advice on if this is worthwhile doing?

rocketspocket

https://www.boards.ie/discussion/comment/119794275#Comment_119794275

Doesn't matter when you buy it to be fair, the only benefit is to write off 1 year depreciation if your financial year is calendar- also the ACA is a farce, if you sell/trade-in the car before 8 years then you have to pay a clawback which is calculated of what the depreciation would have been; i've traded in after 2 and having to pay all of it back so zero benefit... who keep a car for 8 year now days!!

PS - look around, there will be dealers with stock - took me 2 days to get an new ID4

eltoastero

https://www.boards.ie/discussion/comment/119794275#Comment_119794275

Regarding the ACA: I'm fairly sure that the car must be new to write off up to €24k in the first year as ACA, I'm taking that from this document on the revenue site where is (blanket reference to all machinery) states a condition as "3. Conditions The energy-efficient equipment must be new. It must meet certain energy-efficient criteria and must fall within one of the 10 classes of technology specified in Schedule 4A of the TCA, 1997."

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-09/09-02-04.pdf

I assume that "new" rule also applies to EV's, even though it doesn't directly state it in the EV section of the doc.

Regarding BIK: the BIK figure will be calculated on the Original Market Value (or Original Market Price) paid by owner number 1 (or as it's a ex-demo it'll just be the original list price, so it should be handy to find a brochure, if you can't I might have a PDF copy of the brochure, I've a few for an ID3 so let me know the model/registration date and I'll see if I still have it).

The Annual Gross BIK calc for 2023 will be (OMP - €35000) * 22.5%. For example, a day one 2021 ID3 1st Plus (58kWh) had a price before Grants of €45,535 (from a brochure named "ID3_MY21"). The BIK on that will be (€45,535 - €35,000) * 22.5% = €2370 pa (gross), which is €198 pm (gross). BIK would have been zero for the same car during 2022, it's a shame the current rates aren't being extended.

BigGeorge

Great advice - thank you both

innrain

Some interesting news

https://www.rte.ie/news/business/2023/0307/1360853-temporary-changes-to-how-bik-is-charged-on-company-cars/

fafy

https://www.boards.ie/discussion/comment/120326727#Comment_120326727

Lots of BIK refunds incoming, which will be backdated to January 1st, affecting those with Company EV OMV’s between 35 k and 45 K, incoming, this would cover some older Kia ENiros, and VW ID3’s and more.

innrain

Yeah effectively those old Konas and Niros are back to BIK zero this year.

eltoastero

https://www.boards.ie/discussion/comment/120327411#Comment_120327411

Partial BIK refunds for those with cars with OMV greater than €45k too (in the region of €187.50 gross per month)

Math: (€10000 * 22.5%) / 12 = €187.50 less (gross) BIK to pay per month.

Still obviously pay BIK on (OMV - €45k), but this is a sensible move (the jump from €50k relief to €35k relief was daft in the first place)

innrain

It kinda makes sense. They announced this changes to the BIK rules back in 2020ish? The prices went up across the board crazy in the last 18 months due to inflation shortage and what not. Whatever they've calculated back in 2020 that they are going to get in BIK, they got much more and it was a surprise for them as well. People would hand their cars back and claim mileage which is something they don't want to happen for obvious reasons. The civil rates are still based on engine size which is kinda backwards to the BIK rates.

eddhorse

Needs to be some clearer brackets for EVs anyways imo.

Company Cars were no longer a perk, i wonder what swayed them back, must have been someone with a lot of clout.

joe1303l

https://www.boards.ie/discussion/comment/120329250#Comment_120329250

Leasing companies had lots of cars handed back so I’m guessing it was them or maybe SIMI.

Mc-BigE

so December 23 its 45K,

Jan 24 its 20K (or is it 30K now) 😲 ,

its only delaying the situation for 10 months

eltoastero

https://www.boards.ie/discussion/comment/120338646#Comment_120338646

I'm hopeful the same people who made the noise this time can do it again next year.

rocketspocket

https://www.boards.ie/discussion/comment/120339401#Comment_120339401

We'll find out more today hopefully - if they drop it from 45K to 20K (or 25K??) in Jan/24 then expect the bottom to fall out of the EV business market - i for 1 will need to return mine, get a diesel and just charge mileage...

AndrewJRenko

https://www.boards.ie/discussion/comment/121217439#Comment_121217439

That's a great reason to accelerate the banning of ICE sales.