Michael McGrath (Cork South Central, Fianna Fail)
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Local Property Tax (LPT), in common with all other taxes and duties, must have a robust but reasonable set of sanctions open to Revenue to apply in appropriate cases. Section 1080 of the 1997 Taxes Consolidation Act provides for the charging of interest on the late payment of Income Tax. The current rate applied to such late payments is 8% per annum (0.0219% per day). This rate also applies to LPT.

These statutory charges, which Revenue is obliged to apply, are designed to compensate the Exchequer for the late payment of monies due and to maintain a level playing field for the vast majority of taxpayers and businesses that meet their tax obligations in full and on time. The application of interest charges to the late payment of tax is well established as a core strategy for ensuring timely compliance. The onus is on all taxpayers and businesses, assisted by their agents or tax practitioners, to organise their financial affairs to ensure that tax debts are paid as they fall due thereby avoiding interest charges.

However, while Revenue is obliged to collect all tax and interest liabilities as they fall due, it is acknowledged that there will be cases where normally compliant taxpayers experience difficulties, as a result of ill health or other issues, that result in a failure to meet their tax obligations at all or on time. In such scenarios, Revenue is committed to working with any taxpayer who experiences such difficulties. Revenue’s long standing approach is to make it as easy as possible for people to comply with their obligations. Revenue facilitates a number of different payment options by which a taxpayer can discharge their liability to LPT through a single payment or in a weekly or monthly phased payment arrangement. The full range of payment options, which include phased arrangements, are available to property owners via the LPT portal on the Revenue website at

While the legislation does not provide a specific exemption from LPT for persons who are suffering from dementia or Alzheimer’s disease, Section 5 of the Finance (Local Property Tax) Act 2012 (as amended) provides for an exemption from LPT where a person is unable to continue living in their sole or main residence as a result of a mental or physical infirmity which has been certified by a medical practitioner.

Finally, it is possible for persons who are struggling to pay an LPT liability to qualify for a full or partial deferral of their liability on a property in which they live if their income is below a certain limit. The income thresholds were increased in 2022 and are now €18,000 for a single person and €30,000 for a couple to qualify for a full deferral. The income limits to qualify for a partial deferral are €30,000 for a single person and €42,000 for a couple. It is also possible to apply for a deferral on the grounds of hardship if a person suffers an unexpected and unavoidable significant loss or expense as a result of which a person cannot pay their LPT liability without suffering financial hardship. This category applies to persons who do not qualify for a deferral based on their income. The type of loss or expense that would be considered under this category includes a sudden medical expense.

Any person wishing to avail of a deferral must make an application in writing to Revenue.

A deferral is not an exemption or a ‘write off’ of any outstanding liability. The liability still remains due. Interest at a rate of 3% applies on all outstanding deferred liabilities from 1 January 2022. Up to 31 December 2021, the rate was 4%. Where a deferral is in place, the outstanding liability automatically attaches as a charge on the property and must be paid before a sale or transfer can be completed.

Further information on applying for a deferral of LPT is available from the Revenue website at: www.revenue.ie/en/property/local-property-tax/deferral-of-payment/index.aspx.

Michael Ring (Mayo, Fine Gael)
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69. To ask the Minister for Finance if he will reconsider the increase in rates (details supplied) in view of the hardship being caused; and if he will make a statement on the matter. [7475/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Recent Government policy has focused on strengthening the environmental rationale behind company car taxation. Until the changes brought in as part of the Finance Act 2019, Ireland’s vehicle benefit-in-kind regime was unusual in that there was no overall CO₂rationale in the regime. This is despite a CO₂based vehicle BIK regime being legislated for as far back as 2008 (but never having been commenced).

In Finance Act 2019, a CO₂-based BIK regime for company cars was legislated for from 1 January 2023. From the beginning of this year, the amount taxable as BIK is determined by the car’s original market value (OMV) and the annual business kilometres driven, while new CO₂emissions-based bands determines whether a standard, discounted, or surcharged rate is taxable.

In certain instances, this new regime will provide for higher BIK rates, for example in relation to above average emissions and high mileage cars. It should be noted, however, that the rates remain largely the same in the lower to mid mileage ranges for the average lower emission car. Additionally, EVs benefit from a preferential rate of BIK, ranging from 9 – 22.5% depending on mileage. Fossil-fuel vehicles are subject to higher BIK rates, up to 37.5%. This new structure with CO₂-based discounts and surcharges is designed to incentivise employers to provide employees with low-emission cars.

I am aware that there have been arguments surrounding the mileage bands in the new BIK structure, as they can be perceived as incentivising higher mileage to avail of lower rates, leading to higher levels of emissions. The rationale behind the mileage bands is that the greater the business mileage, the more the car is a benefit to the company rather than its employee (on average); and the more the car depreciates in value, the less of a benefit it is to the employee (in years 2 and 3) as the asset from which the benefit is derived is depreciating faster. Mileage bands also ensure that cars that are more integral to the conduct of business receive preferential tax treatment.

I believe that better value for money for the taxpayer is achieved by curtailing the number 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). This brings 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 above and 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 means that the quantum of the relief is phased down from €50,000 in 2022, to €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 a reduced rate of 7% VRT, a VRT relief of up to €5,000, low motor tax of €120 per annum, SEAI grants, discounted tolls fees, and 0% BIK on electric charging.

Finally, it should be noted that this new 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 recent implementation.