VRT hike

Tax hike for buy­ers of jeeps post­poned for four months

Irish Examiner - Farming - - COMMENT - Kieran Cough­lan www.cough­lanac­count­ing.com

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

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