Thursday 21 June 2018

Benefit-in-kind break for drivers of electric cars

A zero rate of benefit-in-kind tax will now apply to electric vehicles used for business purposes. Stock picture
A zero rate of benefit-in-kind tax will now apply to electric vehicles used for business purposes. Stock picture
Mark O'Regan

Mark O'Regan

Drivers of electric company cars are to get a tax break under new measures announced in the budget.

A zero rate of benefit-in-kind tax will now apply to electric vehicles used for business purposes.

Hybrid cars - which use a combination of electric and petrol or diesel power - are not included.

Business motoring account for millions of kilometres every year.

More companies are now likely to embrace electric-powered vehicles because of the new tax deal. There is now speculation that further measures may be introduced to cover hybrid vehicles - which use a combination of an electric motor and a petrol or diesel engine.

Revenue Commissioners guidelines outline how a company car can be supplied to an employee for private use as a benefit-in-kind.

Those benefiting from such a concession are liable for relevant Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC).

The benefit is calculated using the cash equivalent of the company car.

The tax guidelines state: "A benefit-in-kind is any non-cash benefit of monetary value that you provide for your employee.

"These benefits can also be referred to as notional pay, fringe benefits, or other perks.

"The benefits have monetary value, so they must be treated as taxable income."

Basically, the amount of tax and other liabilities are dependent on overall income.

Benefits conferred on an employee's husband, wife, civil partner, family members, or dependants, are also tax liable.

A company director must pay tax on any benefit in kind, regardless of their income. Fianna Fáil Spokesperson on Communications, Climate Action and Environment, Timmy Dooley, claimed that Ireland is still playing catch-up when it comes to moving to electric powered vehicles which help lessen our dependence on fossil fuels.

The state is also failing to reach its carbon emissions target as set out in the Paris Climate Agreement, and as a result is in danger of facing huge fines from the EU.

Electric vehicles are being readily adopted by other European countries to help reach their conservation targets, notably the Netherlands and Norway.

Irish Independent

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