Tax cut on company cars extended for further year as part of budget plans 

New plans announced as part of Budget 2024 include aims to encourage the use of electric vehicles for company car purchases

In an effort to combat these increases, a relief of €10,000 was introduced to be applied to the original market value of cars in Category A-D to reduce the amount of Benefit-in-Kind payable. Issue date: Wednesday August 9, 2023.

Finance Minister Michael McGrath has announced a one-year extension of temporary changes to the Government's CO2 tax regime for company cars. 

Announcing the plans as part of Budget 2024, Mr McGrath said he would be implementing a twelve month extension of the €10,000 temporary universal relief to the original market value of vehicles announced earlier this year.

Introduced as part of the Government's 2023 Finance Bill, Mr McGrath said the move to a CO2 based benefit-in-kind system - which incentives the use of electric and low emission vehicles - saw a significant number of employees with company cars experiencing large increases in their 2023 income tax liabilities.

In an effort to combat these increases, a relief of €10,000 was introduced to be applied to the original market value of cars in Category A-D to reduce the amount of benefit-in-kind payable. 

The relief does not apply to those in category E, where emissions exceed that of 180g/km.

In addition, to incentivise electric vehicles, Mr McGrath announced a temporary suspension of the tapering of the preferential benefit-in-kind relief, maintaining the existing €35,000 original market value reduction for 2024 and 2025.

Initially, for benefit-in-kind purchases, the original market value of an electric vehicle was to be reduced by €35,000 for 2023, €20,000 for 2024, and €10,000 for 2025.

In an effort to further encourage a move away from petrol and diesel cars, Mr McGrath said that when combined with the extension of the universal original market value relief of €10,000, the measure would mean that an employee with an electric company vehicle will see an overall BIK original market value relief of €45,000 in 2024.

In addition, Mr McGrath also extended the vehicle tax registration relief for battery electric vehicles to he end of 2025, with the relief applying to vehicles with a value of up to €50,000.