Calculating BIK for Company Cars

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.

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%

Please find details below:

  1. 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 52,000 13.5 15.75 18 20.25 22.5
52,001 9 10.5 12 13.5 15

 

  1. 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 €35,000.

Per the manufacturer, the car produces 79g/km in CO₂ emissions. The actual business kilometres in the year were 46,000 kilometres. 79g/km in CO₂ emissions puts the car in vehicle Category B.

As the employee drove 46,000 kilometres in the year, the cash equivalent is equal to the OMV x 15.75%

BIK Calculation: Cash Equivalent (OMV) €35,000 x 15.75% = €5,513

Using the same example above, where an employee travels 56,000 business kilometres in the year and the OMV of the car is €35,000 under the current rules the BIK calculation would be as follows:

€35,000 X 12% = €4,200

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

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
  • €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.

For more information on the vehicles, we can provide please contact Jensen Fleet Solutions on 01-4605250 or info@jensenfleet.ie