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BIK

As we head into the new tax year, 2023, there are many changes that are coming in to effect as a result of Budget 2023. It is important that, you as an employer be aware of these changes from a Revenue perspective and an employee rights perspective as a number of them will affect all employers in some way. Please familiarise yourself with the changes and contact us if you require more information. Below is a brief summary of some of the changes.

BIK Changes

BIK on Company Vehicles in 2023:

Cars

Currently based on OMV and annual business kms. From 1 st January 2023 also based on CO2 emissions

  • New system
  • 5 bands based on CO2 emissions (A-E)
  • 4 BIK rates within each band linked to annual kms
  • Rates will range from 9% to 37.5%
  • Mileage thresholds will increase

Vans

BIK increase from 5% to 8% of OMV

BIK Rates from January 2023 (Cars)

Annual Business KMsVehicle Categories
ABCDE
CO2 Emissions - CO2 g per km0-5959-99100-139140-179180+
% of OMV
0-26,00022.5026.5030.0033.7537.50
26,001-3900018.0021.0024.0027.0030.00
39001-52,00013.5015.7518.0020.2522.50
52,000 +9.0010.5012.0013.5015.00

Example:

Vehicle TypeOMVAnnual Business KMCo2 EmissionsVehicle Category
Audi A6 Tdi€54,450Minimal142g per kmD

Example:

20222023Difference
OMV€54,450.00€54,450.00
% BIK (based on band D in 2023)30.00%33.75%
Notional pay€16,335.00€18,376.87€2,041.87
Liabilites due (higher rate)€8,494.20€9,555.97€1,061.77 = €20.42 per week
Employer PRSI€1,805.02€2,030.64€225.62

.

Changes to the current BIK Exemption/Partial Relief for Electric Vehicles

Effective to 31 December 2022, a full exemption applies where the Original Market Value (‘OMV’) of an electric vehicle was €50,000 or less, with partial relief up to €50,000 if the OMV exceeded that amount.

Whilst BIK relief is extended to cover the period from 1 January 2023 to 31 December 2025, it is limited to partial relief on the OMV to be tapered away over time as follows:

  • Reduction of OMV by €35,000 in 2023
  • Reduction of OMV by €20,000 in 2024
  • Reduction of OMV by €10,000 in 2025

We have noted an example below for ease of reference.

Example Electric Car

 2022202320242025
OMV€75,000€75,000€75,000€75,000
Less Exemption€50,000NilNilNil
Reduction in OMVNil€35,000€20,000€10,000
OMV for BIK€25,000€40,000€55,000€65,000
Rate of BIK30%22.50%22.50%22.50%
Notional Pay€7,500€9,000€12,375€14,625
Liabilities due(higher rate)€3,900€4,680€6,435€7,605
Net Pay – Year on Year decrease--€780-€1,755-€1,170

Contact Us:

To discuss in confidence what the measures mean for you or your business, please contact our team outlined below, or your usual RBK contact.

  • Mary Byrne, Payroll Manager (090) 6480600

Return to Budget 2023 Update - Changes coming into effect for Employers

Team Members

Rose Bracken

Payroll Director

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