Budget 2024 and Electric Vehicles Explained

In a notable update for business owners, Budget 2024 has announced the extension of the temporary measures introduced last year regarding the Benefit in Kind (BIK) charging regime for company-provided vehicles. These measures, designed to alleviate the tax burden on business-related vehicle expenses, will be maintained throughout 2024.

Key Notes:

• €10,000 OMV Reduction Extended:

The €10,000 reduction in the Original Market Value (OMV) for vehicles in categories A-D, initially introduced in 2023, will continue until December 31, 2024. This reduction lowers the taxable element of all qualifying vehicles by €10,000, providing significant savings for businesses.

• Electric Vehicle (EV) Benefits Maintained:

Business owners who have purchased electric vehicles (EVs) through their companies will be pleased to know that the €35,000 threshold for EVs will remain unchanged in 2024 and 2025. This threshold was initially set to decrease to €20,000 in 2024 but will now hold steady, providing continuity and further encouragement for the adoption of EVs.

Impact on a Personal Limited Company Contractors

Let's break down the financial implications for a professional limited company contractor with an electric vehicle valued at €50,000 over the next few years:

2023 & 2024:

OMV after €10,000 temporary relief: €40,000

BIK on balance (€40,000 - €35,000) at 22.5%: €1,125

Tax at marginal rate of 52%: €585

2025:

OMV: €50,000

BIK on balance (€50,000 - €35,000) at 22.5%: €3,375

Tax at marginal rate of 52%: €1,755

2026:

OMV: €50,000

BIK on balance (€50,000 - €20,000) at 22.5%: €6,750

Tax at marginal rate of 52%: €3,510

2027:

OMV: €50,000

BIK on balance (€50,000 - €10,000) at 22.5%: €9,000

Tax at marginal rate of 52%: €4,680

2028:

OMV: €50,000

BIK on full amount at 22.5%: €11,250

Tax at marginal rate of 52%: €5,850

The extension of these temporary measures and the gradual tapering of relief for electric vehicles signal a continued commitment to supporting business owners and encouraging the transition to greener transportation options. Business owners and contractors can plan their vehicle-related finances with greater confidence and take advantage of the tax reliefs available over the next several years.