Brian Brennan (Wicklow-Wexford, Fine Gael)
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64. To ask the Minister for Finance if, following the changes to benefit in kind in January 2025, consideration can be given to reviewing cases (details supplied); and if he will make a statement on the matter. [3771/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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In recent years, Government policy has focused on strengthening the environmental rationale behind company car taxation. Finance Act 2019 introduced an environmental rationale for the calculation of Benefit-in-Kind (BIK) on employer provided cars. The introduction of an environmental rationale for BIK was a commitment in the Climate Action Plan and aligns with vehicle BIK policy in several other Member States as well as national vehicle taxation policy. In order to ensure smooth implementation for employees and employers this change was signalled well in advance of the implementation date from which it took effect which was 1 January 2023.

Since 1 January 2023, new rates of benefit-in-kind (BIK) apply to employer provided cars, which take into account the CO2 emissions of the car. The amount taxable as a BIK remains determined by the car's original market value (OMV) and the annual business kilometres driven, with new CO2 emissions bands used to determine whether a standard, discounted, or surcharged rate applies.

This new structure with CO2-based discounts and surcharges is designed to incentivise employers to provide employees with low-emission cars. Electric cars that fall into ‘Category A’ vehicles, i.e., vehicles with CO2 emissions between 0g/km and 59g/km inclusive, benefit from a preferential rate of BIK, ranging from 9% - 22.5% depending on business mileage.

Due to the impact the new emissions based BIK system has on certain petrol and diesel cars, Finance Act 2023 provided as a temporary measure a €10,000 reduction to be applied to the OMV of cars in Category A, B, C and D for 2023 in order to reduce the amount of BIK payable. This was not applicable to cars in Category E - the highest emission category. This treatment also applied to vans and electric vehicles (EVs). This meant that for the purposes of calculating the BIK liability on an employer-provided car, employers could reduce the OMV by €10,000. Additionally, the lower limit in the highest mileage band was amended by way of a 4,000km reduction, so that the highest mileage band was entered into at 48,001km. Finance (No.2) Act 2023 extended these measures to 31 December 2024 and Finance Act 2024 extended the relief for a further year to 31 December 2025.

For EVs, the OMV deduction of €10,000 is in addition to the existing relief of €35,000 that is currently available for such vehicles, meaning that the total relief for EVs in 2025 is €45,000. EVs with an OMV of less than €45,000 have no BIK liability, while those with a higher OMV can reduce the taxable amount by €45,000. This BIK exemption forms part of a broader series of generous measures to incentivise the uptake of lower emissions vehicles, including a reduced rate of 7% Vehicle Registration Tax (VRT), a VRT relief of up to €5,000, low motor tax, SEAI grants, and a BIK exemption on the installation of an EV home charger by an employer at the principal residence of a director or employee.

Further information on the taxation of employer provided vehicles can be found at the links below:

• www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/private-use-company-cars/index.aspx
• www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-01b.pdf