Benefit in Kind – Whats new for 2025?
Benefit in Kind (BIK) tax applies to employees who receive non-cash benefits from their employer, such as a company car. The tax is calculated based on the value of the benefit provided. In the case of company cars, the BIK rate is influenced by factors such as the car’s emissions (CO2 emissions) and its market value.
Finance Bill 2024 included an extension to the temporary measures previously introduced. Please find details below:
1) The amount of business mileage and CO2 emission category
Lower Level | Upper Level | A | B | C | D | E |
Km | Km | % | % | % | % | % |
— | 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 |
2) 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, 2025. The OMV of the car is €55,000. With the new measures introduced in 2023 continuing into 2025, the OMV will reduce 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 reduction of €10,000 will save this employee €1,575 in the tax year.
Electric Vehicles
For an electric vehicle made available for an employee’s private use during 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 2025 year of assessment (OMV can be reduced by €10,000)
- €20,000 in respect of vehicles made available in the 2026 year of assessment.
- €10,000 in respect of vehicles made available in the 2027 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.
Home chargers
A BIK exemption will apply from 1 January 2025 to the provision of electric vehicle chargers at the home of a director or an employee. For the provision to apply the director or the employee must have private use of an employer-provided electric vehicle. Also to remember, a director or employee can be reimbursed for the charging costs of the vehicle free of tax (on the condition that the employer retains supporting documents)
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 2023 onwards the cash equivalent on company vans increased from 5% to 8% of the OMV. With the new measures in place from 2023, the OMV can be reduced by €10,000.
Exemptions from BIK on Vans
Your employee will not pay tax on the benefit of an employer-provided van where:
- you provide your employee with the van for work purposes, and they must bring it home afterwards.
- your employee is not allowed to use the van for private travel apart from travelling to and from work.
- and
- your employee spends at least 80% of their working day away from your work premises.
For more information on the vehicles, we can provide please contact Jensen Fleet Solutions on 01-4605250 or info@jensenfleet.ie