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EV BIK beyond 2022

  • 27-07-2020 6:12pm
    #1
    Registered Users Posts: 46 Keggers74


    I've the option of taking a company car from work instead of a car allowance, but my business does 4 year leases so would be stuck with it until mid 2024 if I took one today.

    My understanding of the BIK exemption is that it currently runs until end of 2022, so in the event that the exemption wasn't extended I'd be left paying full BIK at 30% of OMV (business km would be very low) for the last 18 months of the 4 year lease.

    I know that with the Greens in power that there is a strong likelihood that it will be extended (although perhaps the threshold gets reduced), but I'm interested in how are those of you who have gone the company car route viewing the risk of being left with a full BIK exposure beyond 2022?

    Maybe its just a case of waiting for the next budget and see what is rolled out.


Comments

  • Registered Users Posts: 543 ✭✭✭ Busman Paddy Lasty


    There ain't much direction or logic regarding business owned vehicles since the last budget where €3,800 worth of grants were removed!

    Hopefully the Greens will change this but there could be some sort of austerity measures due to coronavirus. I might offer to by the car off the company if the BIK is going to penal but I do about 35,000 km to 40,000 a year.

    What business mileage do you drive per year? Bear in mind the OMV is pre incentives so eNiro has OMV of 50 grand!


  • Registered Users Posts: 737 ✭✭✭ Zenith74


    I recently moved to a company car to make use of the 0% BIK. My view was that even if I did end up paying BIK for a year or two, it would work out to my advantage. Also have the option to buy the car off the company if BIK went back up and it looked sensible to do so.

    Best thing to do I think is get a spreadsheet setup to compare the two options (assuming it's buy a new car yourself, or get the same one through the company). Factor in stuff like all tax/insurance/services/tyres/repairs/tolls/parking paid by company, if you were going to pay cash yourself maybe you could use that money to clear down some of your mortgage (save a few hundred quid in interest).

    If you wanted to share what the car allowance amount is, is it taxable/tax-free, the car value you'd be looking at etc. you might get some pointers here...


  • Registered Users Posts: 46 Keggers74


    Hi Zenith/Busman

    I'm allowed anything up to €1,000 per month pre-VAT spend for a 4 year, maintenance inclusive lease. It can get me some nice options (Model 3 Performance, possibly an e-Tron 50, etc), but would be left covering the BIK on the excess OMV over €50k. Happy to bear that, but paying BIK on the full OMV for a year or two would be hard to take! My business mileage is negligible, so I'd be on the full whack 30% BIK. Will look at a few options and work it out from there. Might still wait for the October budget though and make a call then.


  • Registered Users Posts: 543 ✭✭✭ Busman Paddy Lasty


    No harm in being thorough. Especially if you'd be financially better off buying the car!

    Local Green TD is going to get a weekly email until they clarify an extension or not. I need to double check the examples on the revenue website also and see exactly how much each band will cost me.


  • Registered Users Posts: 737 ✭✭✭ Zenith74


    We've purchased 6 EVs in work since this incentive came in, that number would have been maybe 1 without it. It's clearly working, so it would be a real shame if they removed it, but given it was only recently reintroduced in the UK I doubt it's likely to go too soon.


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  • Registered Users Posts: 11,209 ✭✭✭✭ KCross


    No one knows what a government will do but I reckon when they remove this incentive it will be phased out, not just a sudden abrupt axing of it.

    For instance, if someone bought a EV a month before the budget and they completely axed it it would cause uproar as company cars are bought at least on a 3yr cycle. There was alot of push back on this point when they initially introduced the measure 2 years ago as they only initially guaranteed it for 1yr but based on feedback clarified it after the budget that it was for 3yrs as they began to understand that businesses dont buy company cars for 1yr! :rolleyes:

    So, if they were planning on axing it I'd say they would extend it in the budget but clearly state it is being removed(or reduced rate) after that... i.e. give certainty to businesses over at least a 3 year period.

    I know the Op has a 4yr cycle but I'd imagine you could handle the final year if the tax was punitive... buy the car out in advance or something.

    OBVIOUSLY IM SHOOTING THE BREEZE HERE, SO DONT SPEND €50k ON THE BACK OF MY COMMENTS!


  • Registered Users Posts: 8,335 ✭✭✭ Royale with Cheese


    The previous government mentioned moving to an emissions based system for BIK from 2023 onwards when they confirmed 0% would end on 31/12/2022. I would take that to mean a soft landing for BIK on EVs but in reality it means nothing as we have a different government now (we could even have another one by 2023). I'd be surprised to see it go from 0 to 30% overnight however.

    I got in just before the €3800 grant was gone so made sense for me, I knew I'd get three years out of the 0% rates. I'd be more reluctant to buy now. If BIK does get whacked back up I'll probably look into selling the car to myself, if the market is flooded with ex fleet EVs in 2023 you can probably knock a bit off the value when selling to yourself too.


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