Anne Rabbitte (Galway East, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

66. To ask the Minister for Finance his views on the forthcoming changes to benefit-in-kind and the subsequent impact on a group (details supplied); and if he will make a statement on the matter. [25004/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In Finance Act 2019, I legislated for a CO₂-based BIK regime for company cars from 1/1/2023. From that date the amount taxable as BIK remains determined by the car’s original market value (OMV) and the annual business kilometres driven, while new CO₂emissions-based bands will determine whether a standard, discounted, or surcharged rate is taxable. The number of mileage bands is reduced from five to four. EVs will benefit from a preferential rate of BIK, ranging from 9 – 22% depending on mileage. Fossil-fuel vehicles will be subject to higher BIK rates, up to 37.5%. This new structure with CO₂-based discounts and surcharges will incentivise employers to provide employees with low-emission cars.

I believe that better value for money for the taxpayer is achieved by curtailing the amount of subsidies available and building an environmental rationale directly into the BIK regime. It was determined in this context that reforming the BIK system to include emissions bands provides for a more sustainable environmental rationale than the continuation of the current system with exemptions for electric vehicles (EVs). However, in light of government commitments on climate change, Budget 2022 extended the preferential BIK treatment for EVs to end 2025 with a tapering mechanism on the vehicle value threshold.

This BIK charging mechanism was legislated for in 2019 and was announced as part of Budget 2020. I am satisfied that this has provided a sufficient lead in time to adapt to this new system before its implementation in 2023.