Benefit in Kind Exemption on Electric Vehicles
One of the most interesting and innovative tax exemptions for businesses in recent years has been the tax incentive on acquiring an electric versus diesel or petrol vehicle. The purpose of the tax legislation has clearly been to incentivise a move away from vehicles running on fossil fuels to a modern and less environmentally impacted electric energy. Whilst there are concerns that there is a lack of infrastructure in Ireland for electric vehicles, there are an increasing number of charging points, the KM range of many vehicles is increasing and the costs of a home charger is a worthwhile investment.
The law is specific that it must be a fully electric vehicle to qualify and this excludes hybrid versions that are a combination of fuel and electric.
Buying an electric motor vehicle makes sense for many reasons as explained below:
Funding of the Capital Cost- Your employer can fund the cost of the vehicle, effectively halving the vehicle cost for higher rate taxpayers
Benefit in Kind (BIK) Exemption - No BIK applies on the Original Market Value of the vehicle irrespective of how many business KM's you travel or how much you contribute to private fuel
Substantially Lower Running Costs - Road Tax , Energy & Maintenance are also significantly lower
Capital Allowances - Accelerated Capital Allowances apply on Electric Vehicles resulting in a first year tax write off in year 1
When analysed closer it can be seen that the cashflows connected with an acquisition of an electric vehicles are very favourable compared to the costs connected with running a diesel or petrol one.
If you would like to discuss this blogpost in more detail and for your own businesses circumstances then contact me at michaelomahony@omahonydonnelly.ie
