Understanding when Benefit-in-Kind (BIK) tax does not apply can help optimise the use of company-provided vehicles and potentially save on taxes. This article explores scenarios where BIK is not applicable, including the use of car-pools and electric vehicles, and outlines the specific conditions and exemptions that can benefit your organisation.

Car-pools

Employees who use an employer-provided vehicle in a car-pool do not have to pay tax on this benefit. A car-pool exists where:

• A car is available and used by more than one employee.
• The car is not regularly used by one employee who prevents others from using it.
• Private use of the car by the employee is minimal.
• The car is not regularly kept overnight at or near the employee’s home.

State employees may have to drive a state-owned car as part of their job. They may keep that car overnight at or near their home if:

• They are on call outside their normal working hours, or
• The car would otherwise be a ‘pool car.’

Electric Vehicles

Certain Benefit-in-Kind (BIK) exemptions and discounts are available when the car made available to your employee is an electric car. Electric cars are vehicles that get their motive power from electricity only. Hybrid cars do not qualify as electric cars. This treatment applies to both new and used cars.

Exemption

There was an exemption available where you made an electric car available to your employee for private use from 2019 to 2022.

2023 to 2027 Extension of Exemption

You may choose to make an electric car available to your employees for private use in the future. Partial relief will apply to electric cars made available between 1 January 2023 and 31 December 2027. This relief applies by reducing the Original Market Value (OMV) of the vehicle. The reduction is as follows:

• €35,000 for cars made available during 2023, 2024, and 2025.
• €20,000 for cars made available during 2026.
• €10,000 for cars made available during 2027.

Where the relief reduces the OMV to nil, a BIK charge will not arise. Any OMV in excess of the reduction is liable to BIK in the usual way.

For 2023 and 2024, an additional reduction of €10,000 can be applied to the OMV.

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