Dáil Éireann Debate, Wednesday - 8 October 2025
179. Deputy Conor Sheehan asked the Minister for Finance if the deferral of the proposed tapering of benefit in kind will be continued following Budget 2026; and if he will make a statement on the matter. [54020/25]
View answerFrom 1 January 2023, new rates of benefit-in-kind (BIK) were applied to the provision of an employer-provided car, 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.
Finance (No.2) 2023 extended the tapered BIK relief available for EVs to end-2027. This means that for an electric car/van made available for an employee’s private use during the years 2024 to 2027, the cash equivalent will be calculated based on the actual OMV of the vehicle reduced by:
• €35,000 in respect of vehicles made available in the 2024 and 2025 year(s) of assessment;
• €20,000 in respect of vehicles made available in the 2026 year of assessment; and
• €10,000 in respect of vehicles made available in the 2027 year of assessment.
The tapered BIK relief is in addition to the universal temporary €10,000 reduction applied to the OMV of cars in categories A-D and vans to end-2025. This means that for the purposes of calculating BIK liability on an employer-provided EV, employers can reduce the OMV by €45,000 for the 2025 year of assessment. Therefore, 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. The reductions apply irrespective of the actual OMV of the vehicle or when the vehicle was first provided to the employee.
Electric vehicles (EVs) currently benefit from a number of incentives, including preferential rates of BIK, Vehicle Registration Tax (VRT) relief of up to €5,000 to end-2025, a low annual motor tax rate, and a BIK exemption on the installation of an EV charging facility by an employer at the home of a director or employee.
In relation to whether a deferral of the proposed tapering of the BIK relief will be continued following Budget 2026, the Deputy will be aware that it is a long-standing practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
