Tax hike for buyers of jeeps postponed for four months
Vehicle registration tax was due to change on a variety of commercial vehicles from this week, in draft plans initiated via the 2017 Finance Bill.
Types of vehicles affected include five-seater jeeps with large cargo areas, such as Toyota Landcruisers, Range Rovers, Mitsubishi Pajeros etc. VRT on such vehicles was to rocket from 13.3% to up to 36% of the open market price. But the start date has been delayed to July 31, 2018, a three-month reprieve for the motor industry. The VRT changes will increase the cost of owning a new jeep by tens of thousands of euro. For instance, the list price for a 5-seater Landcruiser commercial vehicle is €67,780, whereas a 7-seater equivalent has a €104,630 price tag. Not alone does the VRT hike add t o the list price, but Vat is charged on top of the VRT price, a double whammy for farmers and other business users not registered for Vat. The new rules will affect commercial vehicles with four or more seats, and cargo area under one roof or in the same compartment as the seating. Vehicles with three seats or less, such as vans, and two-
seater commercials, will not be affected. Equally crew-cab vehicles, with cargo area separate (usually external) are not affected. Such vehicles must have a BE bodywork code at the type approval stage, with a gross weight less than 3.5 tons. Finance Minister Pascal Donoghue recently said in the Dáil: “Section 130 of the Finance Act 1992 as amended by section 53 of the Finance Act 2017 provides that from 31 July 2018, N1 vehicles with 4 or more seats will be liable to VRT at the Category A rate, except where the vehicle has a BE bodywork code. The BE bodywork code is assigned at type approval stage to N1 vehicles where the vehicle does not exceed 3,500kg, and where the seating positions and cargo area are not located in a single compartment. N1 vehicles with a BE bodywork code, and N1 vehicles with 3 or fewer seats, will continue to benefit from the Category B rate of VRT. These provisions will ensure the lower rate of VRT will continue to apply to vehicles that are designed principally for the carriage of goods.” Meanwhile, the government has signalled its intention to review BIK rules for company/ business vehicles provided to employees. Currently, our BIK system results in very punitive taxation of the benefit of a vehicle provided to an employee. Last year’s finance act brought in a new measure for one year only of 0% BIK to encourage use of electric cars. But the Government has signalled its intention to extend it to at least three years, in order to stimulate conversion of company vehicles to electric. The UK has a much more business-friendly approach to BIK in respect of crew cabs. Perhaps the review of the Irish tax code might align rules here to UK rules, allowing farmers and business owners legitimately avail of reduced VRT, and BIK rules that encourage business.
Chartered tax adviser ■ Kieran Coughlan, Belgooly, Co Cork. (086) 8678296