Gerald Nash (Louth, Labour)
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256. To ask the Minister for Finance the incentives, if any, that will be provided to companies and workers who require company vehicles, to move to EVs, especially in view of the impact of changes to the BIK regime on such workers; and if he will make a statement on the matter. [54338/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Recent Government policy has focused on strengthening the environmental rationale behind company car taxation. In Finance Act 2019, I legislated for a CO2-based BIK regime for company cars from 1 January 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 CO2 emissions-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 – 22.5% depending on mileage. Fossil-fuel vehicles will be subject to higher BIK rates, up to 37.5%. In terms of impacts, broadly speaking this means that higher emission vehicles will experience BIK increases versus the 2022 year of assessment, while lower emission vehicles will experience a lower BIK liability depending on mileage levels. This new structure with CO2-based discounts and surcharges is designed to incentivise employers to provide employees with low-emission cars.

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). This will bring the taxation system around company cars into step with other CO2-based motor taxes as well as the long-established CO2-based vehicle BIK regimes in other member states.

In addition to the favourable treatment for low emission vehicles in this new structure, there is currently also a BIK exemption for BEVs with an OMV up to €50,000. The current BIK exemption will continue to apply to 31 December 2022 as currently provided for in the legislation. From 2023, the original market value (OMV) reduction for BIK purposes is progressively phased out until end 2025. This extension is in support of Government policy to incentivise the transition to electric vehicles. The relief serves to reduce the OMV of the vehicle, for the purposes of determining the taxable cash equivalent, by €35,000 in 2023, €20,000 in 2024 and €10,000 in 2025.

This BIK exemption forms part of a broader series of very generous measures to support the uptake of EVs, including

- Vehicle Registration Tax relief of up to €5,000 for battery electric vehicles (BEVs). From January 2021, this relief is no longer available for BEVs with an Open market Selling Price of more than €50,000. This cap was introduced as a value for money consideration to ensure the reliefs remains targeted.

- Home Charger Grant - Up to €600 towards the installation cost of a domestic charge point for new and second-hand BEVs or PHEVs.

- Low Motor Tax - BEVs qualify for the lowest tax band of motor tax at €120 per annum, while a plug-in hybrid vehicle (PHEV) is typically taxed at circa €170 per annum.

- BEV and PHEVs qualify for 50% and 25% toll reductions respectively up to a maximum €500 annual threshold for private vehicles and a maximum annual threshold of €1,000 for commercial vehicles

- A grant of up to €10,000 to support the purchase of a BEV in the taxi/hackney/limousine sector with an additional €2,500 available for those choosing to make their vehicle wheelchair accessible.

- Those scrapping older, more polluting, or high mileage vehicles are now eligible for double the normal grant if they make the switch to electric with up to €20K available for a new BEV, €25K for a new wheelchair accessible BEV and €15K for a new wheelchair accessible PHEV.

- Alternatively Fuelled Heavy-Duty Vehicle (AFHDV) Purchase Grant Scheme - grant levels under the Scheme are calculated as a percentage of the difference in price between a conventionally-fuelled diesel HDV and its alternatively-fuelled equivalent.

In summary, I am satisfied that the Government has provided a broad suite of supports for the uptake of EVs.