Temporary changes have been made to how Benefit-in-Kind (BIK ) is charged on company cars and vans, which applies from 1st January 2023 until 31st December 2023.
The BIK system moved to a CO2 based system at the start of the year to encourage the use of electric vehicles and lower emission cars.
However, many employees with company vehicles experienced large increases in their income tax liabilities since this new system came into effect on 1st January.
These temporary measures have now been introduced to help ease this financial burden.
The Original Market Value (OMV ) of cars in Category A-D, will be reduced by €10,000 which will consequently reduce the BIK charge. This reduction is not applicable to cars in Category E. The upper limit in the highest mileage band will also temporarily reduce by 4,000km to 48,001km.
The temporary changes will also apply to company vans. The cash equivalent for vans will be calculated as eight per cent of the OMV, with a €10,000 reduction in the OMV.
Electric vehicle users will see an increase of €10,000 to the existing deduction available of €35,000. This means that the cash equivalent will be calculated based on the actual OMV of the vehicle reduced by €45,000.
