Which electric cars will suffer under Donohoe’s BIK cap?
Minister for Finance Paschal Donohoe flagged in his Budget 2019 speech that the 0 per cent benefit-in-kind (BIK) rate for electric vehicles will be extended for a period of three years.
A BIK is a non-cash benefit an employer gives to an employee and the retention of the 0 per cent rate effectively means that no taxable benefit arises for an employee where they’re given an electric car or van by their employer.
However, in Budget 2019, the Minister put a cap of €50,000 on the original market value of a vehicle that qualifies for this tax rate. Any amount over the €50,000 limit will incur BIK.
That reduced cap means that for models like the new Jaguar I-Pace and Teslas current range in the Republic, a BIK bill is going to be involved.
BIK on cars generally works by calculating 30 per cent of the cash value of the car and applying tax to this, with a reduction for business travel over 24,000km. So, for example, a car worth €30,000 will cost an employee €2,000 a year in tax for lower rate payers, and €5,200 for those on the higher rate. For the electric cars under €50,000, employees won’t pay a thing. However, there is another catch. The limit applies before the current €10,000 of grants (€5,000 SEAI grant and €5,000 in VRT rebate) are drawn down, so while a BMW i3 may cost a buyer €35,760, for the purposes of BIK it is regarded as a €45,750 car. Add more than €4,250 of options to the car and BIK starts to apply.
So, which electric car can you get that will not incur BIK? Well, there are more options than you might realise.
BMW’s i3 electric vehicle charges 80 per cent of its battery at a quick charging station in 42 minutes. The car has a 260km range. Prices for the I3 start from €45,750 before the grants.
The latest electric version of Volkswagen’s Golf – the e-Golf – has hit the Irish market with prices starting from €45,550 before the grants. The car has a range of about 300km.
Starting prices for Nissan’s Leaf range from €38,690 to €42,600 at the higher end before the grants. The Leaf 40KWH SVE is the more expensive model and can travel for about 270km between charges.
However, some electric car options will benefit only partly from the zero per cent BIK rate.
For example, the cheapest version of the Tesla Model S starts from €95,198 while the more expensive version, with a 613km range, starts from €162,698. The family-orientated Model X starts at €101,870.
■ The family-orientated Model X starts at €101,870, so corporate buyers will face a BIK charge on a sizeable portion of the car’s price.