Budget 2019: Which electric cars fall under Donohoe’s BIK cap?
The €50,000 limit means cars like the Tesla Model X won’t fully benefit from the 0% BIK rate on electric cars
Prices for Renault’s Twizy start from €9,995. Photograph: Eloi Stichelbaut/ Renault
The family-orientated Model X starts at €101,870. Photograph: Reuters/Regis Duvignau/ File Photo
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.
If a German car is more your thing, 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.
Notably, if you were buying a Volkswagen Golf that wasn’t electric – even at the most basic level – there would be considerable cost for employees, considering prices start from €21,095. In a worst-case scenario, an employee could be paying more than €3,290 a year in benefit-in-kind. With the 0 per cent rate, there are obvious incentives for employers to opt for the electric VW.
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 and charges from 20 per cent to 80 per cent in about 60 minutes.
Hyundai Ioniq (electric)
Hyundai’s Ioniq comes in different formats, one of which is full electric. Starting from €38,995 before the grants, the car has a 280km driving range.
If you’re keen on a Renault that can travel further, the company’s Zoe range also falls within the cap, with prices starting from €33,590 before the grants for the bottom of the scale and €39,990 for the higher end cars. While Renault boasts that the Zoe can travel up to 400km, it says its range is more likely to be between 200km in winter conditions and 300km in temperate conditions.
If you’re a low mileage driver and fancy something different, Renault’s Twizy starts from €19,995 before the grants. At 100km, the Twizy’s range is quite a bit lower than some other vehicles, but it is a considerably smaller vehicle and drivers may prefer not to use it for longer journeys.
What you can’t have
While there are a number of options open to corporate drivers with Paschal Donohoe’s new cap, 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.