Benefits Are Kind
As Irish people, we are hard wired with that “nothing comes for free” mentality, which is excellent for maintaining that hard working focus and work ethic we are often known for, but can also be a negative attribute as it can sometimes mean that we fail to know what options are available to us and never enquire further. We here at EcovisDCA value our clients and friends so much that, as always, we endeavour to ensure that you are fully informed and up to date on your entitlements. After all, the squeezed middle, is surely squeezed enough so any relief SME owners can get is welcome.
Here in Ireland we have only really begun our journey into becoming more energy efficient, resulting in new initiatives being announced in order to encourage and support companies endeavouring to become more energy efficient. In recent Budgets it was announced that there would be a Benefits in Kind (BIK) exemption on Electric Vehicles, this can also be applied to company cars. A Benefit in Kind refers to any non-cash benefit of monetary value provided by an employer for an employee, often known as ‘benefits’ or ‘perks’. Due to the monetary value nature of these benefits, they are deemed taxable income. As such, deductions must be made by the employers on these benefits. How can a BIK Exemption on Electric Company Cars work for you?
From January 1st 2018 no taxable benefit applies for an employer providing an employee with an electric car or van. The BIK exemption will only apply to cars fuelled solely by electrical means, there will be no change to the status on hybrid cars. This could lead to valuable savings for you and your company in the long term. The addition of company owned car charging points is an optional additional benefit for these employees as these too are exempt and offer the employee free fuel with no taxable deduction on either side.
- There are however a number of points to consider as with any exemptions there are of course conditions.
- Per the announcements of Budget 2019, there is now a cap on the original market value of the vehicle that is exempt. Any electric vehicles with an original market value in excess of €50,000 will remain taxable in the normal manner.
- Should an electric car or van be made available to an employee for private use, no taxable benefit will arise in relation to that use.
- The exemption remains in place from January 1st 2018 until December 31st
- Cars and vans must derive their power only from electrical means, hybrid vehicles do not qualify for this exemption.
We hope that this information will be of use to you going forward and as always, we here at EcovisDCA are always on hand should you have any queries or concerns on any business or financial matters.
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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY