Firms face electricity tax hike and vehicle grant limit

BUSINESSES were hit with two green budget blows with higher electricity taxes on the way as well as exclusion from some of the electric vehicle incentives.

There are currently two electricity tax rates of 50c per unit, measured as a megawatt hour, for business users and €1 per unit, for other non-domestic users such as State bodies, while electricity for domestic use is exempt.

The lower rate is now being abolished so business users will pay the higher rate, a move Finance Minister Paschal Donohoe described simply as an equalisation measure.

While the move was announced under the heading of climate-related measures, the tax is paid regardless of whether electricity is supplied from renewable sources or not so it is being perceived as a tidying up exercise rather than an attempt to change behaviour.

The cost to individual

€3,800 grant to buy EV for an employee has been scrapped

businesses will be small and the measure will bring in just €2.5m in a full year.

Of possibly greater significance to some businesses, in particular small enterprises, is the decision to scrap the €3,800 grant towards buying electric vehicles for individual employees.

Businesses will still get grants towards electric work vehicles, such as delivery vans, but not for buying company cars.

They will, however, still be able to avail of a generous benefit in kind (BIK) tax relief if buying electric cars for their personnel.

Climate Action Minister Richard Bruton said it was decided the grant was not needed as the BIK relief provided sufficient incentive.

BIK relief was introduced last year and allows employees with electric company cars to escape paying any BIK.

The relief is set to run until 2021.