Calculating BIK for Company Cars 2023
BIK Changes from 2023
At Jensen Fleet we aim to make managing your company fleet easier. This handy guide will help you to calculate the BIK due from each employee on their company car.
From January 2023 the way we charge BIK to company cars is changing. The new system will be based on the CO2 emission from each vehicle and the business mileage completed. The new minimum BIK rate after discounts will increase to 9%, and the maximum rate will be 37.50%
Temporary Changes to the BIK System for 2023
On the 7th of March 2023 the government announced temporary changes to the new BIK system they had put in place from January 2023. These measures are temporary and will run to December 2023 & will be backdated to January 2023.
The main changes after the 7th of March are as follows:
1) A relief of €10,000 to be applied to the Original Market Value (OMV) of cars in the C02 Categories A-D.
2) The €10,000 relief will also apply to vans and Electric Vehicles. For EV’s this means the total relief allowed is now €45,000
3) Vehicles which fall into CO2 category E will not get any relief.
4) The threshold for highest mileage band is being reduced by 4,000km from 52,001Km to 48,001km. This means that employees who travel high amounts of mileage will enter the lowest rate of BIK earlier.
Please find details below:
- The amount of business mileage and CO2 emission category
| Lower Level | Upper Level | A | B | C | D | E |
| Kilometres | Kilometres | % | % | % | % | % |
| — | 26,000 | 22.5 | 26.25 | 30 | 33.75 | 37.5 |
| 26,001 | 39,000 | 18 | 21 | 24 | 27 | 30 |
| 39,001 | 48,000 | 13.5 | 15.75 | 18 | 20.25 | 22.5 |
| 48,001 | — | 9 | 10.5 | 12 | 13.5 | 15 |
- The CO2 emission category of the car is as per the following table.
| Vehicle Category | CO2 Emissions (CO2 g/Km) |
| A | 0g/Km up to and including 59g/Km |
| B | More than 59g/Km up to and including 99g/Km |
| C | More than 99g/Km up to and including 139g/Km |
| D | More than 139g/Km up to and including 179g/Km |
| E | More than 179g/Km |
Example
An employee has the use of a car provided by his or her employer on January 1, 2023. The OMV of the car is €55,000. With the new temporary measures applied, the OMV will reduced by €10,000 to €45,000.
Per the manufacturer, the car produces 79g/km in CO₂ emissions. The actual business kilometres in the year were 47,000 kilometres. 79g/km in CO₂ emissions puts the car in vehicle Category B.
As the employee drove 47,000 kilometres in the year, the cash equivalent is equal to the OMV x 15.75%
BIK Calculation: Cash Equivalent (OMV less €10,000) €45,000 x 15.75% = €7,088
The temporary measure of the reduction of €10,000 will save this employee €1,575 in the tax year.
Records
Employers, are required to maintain records of the kilometres travelled by each employee. This should be maintained on a weekly / monthly basis to calculate the BIK to be reported on a real time basis via the weekly/monthly payroll returns. Revenue have advised that employers should review this regularly (at least quarterly) to ensure the BIK recorded to Revenue is as accurate as possible.
Company Vans from 1st January 2023
From 2023 onwards the cash equivalent on company vans will increase from 5% to 8% of the OMV. With the temporary measure in place the OMV can be reduced by €10,000.
Electric Vehicles
For an electric vehicle made available for an employee’s private use during the years 2023 – 2025, the cash equivalent will be calculated based on the actual original market value (OMV) of the vehicle reduced by:
- €35,000 in respect of vehicles made available in the 2023 year of assessment (OMV can be reduced by €10,000)
- €20,000 in respect of vehicles made available in the 2024 year of assessment
- €10,000 in respect of vehicles made available in the 2025 year of assessment
If the reduction reduces the OMV to Nil, a BIK charge will not arise. Any portion of OMV remaining, after the reduction is applied, is chargeable to benefit-in-kind at the prescribed rates.
Payroll Implications
As these changes will be backdated to the 01.01.23 there be a one off adjustment to BIK in the next payroll cycle.
For more information on the vehicles, we can provide please contact Jensen Fleet Solutions on 01-4605250 or info@jensenfleet.ie
