Paschal Donohoe (Dublin Central, Fine Gael)

The amendments relate to the temporary reduction applied to the OMV of cars in categories A1 to D, inclusive, and all vans for the purpose of determining the benefit-in-kind, BIK, payable. The amendments seek to have the OMV reduction remain at €10,000 until 31 December 2028 in contrast to the tapering out of the relief provided for in the Bill as it stands.

The Government remains committed to the environmental rationale behind the current emissions-based vehicle BIK regime, which has been in operation since 1 January 2023. Temporary changes were made to BIK in 2023 in light of the inflationary context at the time, and it is now appropriate that these changes are gradually phased out. As part of the Finance Bill 2025, the OMV deduction is being extended for three further years of assessment on a tapered basis, to end on 31 December 2028. The OMV will be reduced by €10,000 for the 2026 year of assessment, a figure that will reduce thereafter to €5,000 for the 2027 year of assessment and €2,500 for the 2028 year of assessment.

With the temporary changes made to BIK in recent years, there has been a level of uncertainty for employers when it comes to planning long-term fleet investments. A more strategic approach is required to give policy certainty to employers and employees. The tapering out of the temporary universal OMV relief and the introduction of a new BIK rate for zero-emission cars provides greater long-term certainty in this area. The gradual phase-out of the relief will ensure that, by 1 January 2029, BIK will revert to the structure as initially legislated for in the Finance Act 2019.

The large-scale transition to electric vehicles, EVs, is crucial to Ireland meeting its national and EU emissions reduction targets. The climate action plan aims to have 945,000 EVs and low-emission vehicles on the road by 2030. Continuing to support fossil-fuelled vehicles through the BIK system is incompatible with delivering these targets, but I am extending the relief on a tapered basis to provide more time for employers to provide lower emission cars to employees in order to reduce BIK liability.

To respond to the question put by Deputy Doherty, I have asked whether the information is available on what would be the change in the tax liability on a per car or per category basis due to the implementation of the policy in this Finance Bill. I am informed that Revenue does not have the information available on a per car basis or per category basis. We only have the total value involved in the implementation of the BIK relief.