Elec­tric cars and ben­e­fit in kind

The Corkman - - MOTORING IN 2018 -

THE fol­low-up to Bud­get Day is the pub­li­ca­tion of the law — the Fi­nance Bill — which gives ef­fect to the Bud­get Day changes. Over the course of this process, ad­di­tional tax mea­sures over and above what was an­nounced on Bud­get Day of­ten emerge. Th­ese are rarely in the tax­pay­ers’ favour.

It is a mea­sure of the pre­oc­cu­pa­tion with tracker mort­gages that a sig­nif­i­cant tax ex­emp­tion could be an­nounced by the min­is­ter last week, yet re­ceive hardly any at­ten­tion. The an­nounce­ment has to do with elec­tric cars.

If an em­ployer pro­vides an em­ployee with the use of a car, that’s treated as a tax­able “ben­e­fit in kind” by Rev­enue. Each year up to 30% of the value of the car is treated as if it was ad­di­tional salary, and the em­ployee is taxed ac­cord­ingly.

On Bud­get Day, Fi­nance Min­is­ter Paschal Dono­hoe an­nounced a one-year ex­emp­tion from ben­e­fit in kind on elec­tric cars.

In re­al­ity, a one year ex­emp­tion wouldn’t have been much use as an in­cen­tive, but his an­nounce­ment last Tues­day that the zero rate of ben­e­fit in kind tax on elec­tric cars would re­main for a min­i­mum of three to five years is surely a game changer! Cou­pled with an­other bud­get an­nounce­ment that the recharg­ing of cars on em­ployer premises would also be tax-ex­empt, this holds out the prospect of com­pletely tax-free mo­tor­ing, at least from the em­ployee per­spec­tive.

Tra­di­tion­ally mo­tor­ing has been a favourite tar­get when it comes to rais­ing money for the ex­che­quer. Ve­hi­cle reg­is­tra­tion tax, ex­cise du­ties on road fu­els, high rates of Vat, and road taxes all meant that when­ever a tax break on mo­tor­ing was pre­sented in the past, it is avidly availed of.

Lower road taxes on less CO2-emit­ting en­gines changed the make-up of the na­tional fleet, and a low rate of VRT at one time meant that twin cabs seemed om­nipresent on our roads.

Not all work­ers are in the for­tu­nate po­si­tion of be­ing of­fered the use of an elec­tric car as part of their pack­age, but last week’s an­nounce­ment will un­doubt­edly make it more com­mon.

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