Did you know that the new 0% Benefit in Kind Tax (BIK) on Electric Vehicles can be good for your business and employees too?!
A benefit in kind is any non-cash benefit of monetary value that an employer provides for their employee. These benefits are usually known as notional pay, fringe benefits or indeed perks. These benefits have monetary value and must therefore be treated as taxable income (www.Revenue.ie).
How could understanding Benefit in Kind (BIK) tax help you in your business? Well, employers must deduct Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) from their employee’s pay on the value of this benefit. When it comes to providing a working vehicle to an employee, a conventional company vehicle can attract upto 30% of the full retail price in Employee Gross Taxes, but from 1 January 2018 no taxable benefit will arise for an employee or a director, where an employer provides an employee or director with an electric car or van (www.Budget.gov.ie). That means you get taxed less for providing an employee with an Electric Vehicle from 1 January 2018 (to 2021). Indeed you could stand to gain upto €4000+ in your first year of purchase!
Top 5 Points to Consider:
1. Employers can offer EV’s as a benefit to employees without attracting Employer PRSI.
2. Employees will benefit from no net pay deductions when provided with a EV Company Car.
3. Effectively an employee can benefit from free fuel from their employer due to the provision of electricity through company owned charge points, which does not give rise to a taxable benefit for the employee or director from 1 January 2018.
4. No BIK will be incurred on employees charging EVs at work – whether company owned or not.
5. Note that 0% BIK is not available on Hybrid or Plug-In Hybrid EV.
If you have more questions about how you or your company can gain from providing a 0% (BIK) electric vehicle to employees then do visit or contact us.