First it was the Ford Cortina and the Opel Ascona. Then it was the Sierra and the Vectra. Then the posh brands started getting in on the game and the competition became a three-way tie between the BMW 3 Series, the Audi A4, and the Mercedes-Benz C-Class. The rules of engagement never changed though – this was always about trying to have the shiniest wheels in the company car park.
That has all changed now, as the rules and regulations surrounding company cars – mostly the benefit in kind, or BIK, tax system – closed up and in, making it more expensive for people to run a company car.
In recent years, that system has been especially sclerotic and confusing, not least because the Irish Government performed a spectacular U-turn on BIK rules in 2023 – having at first introduced rules which seemed to wipe out any benefit of having a company car, before relenting and introducing a bonus €10,000 knocked off the value of a company car or van for tax purposes, a bonus that will run out at the end of 2024.
Being as this piece was written before we knew what was contained in Budget 2025, there’s a bit of groping in the dark where the rules are concerned, but we can say that as things stand right now, getting a company car is still a terrific idea. It just has to be the right company car.
‘A gas emergency would quickly turn into an electricity emergency. It is low-risk, but high-consequence’
The secret to cooking a delicious, fuss free Christmas turkey? You just need a little help
How LEO Digital for Business is helping to boost small business competitiveness
‘I have to believe that this situation is not forever’: stress mounts in homeless parents and children living in claustrophobic one-room accommodation
The ‘right’ company car will almost certainly be electric, or at least a plug-in hybrid with very low emissions. If you’re being given an electric car, one made up to the end of 2025, at the moment the BIK rules say that you can take €35,000 off the value of the car for tax purposes, plus the €10,000 bonus amount that runs to the end of 2024.
Which means that if your new company wheels cost less than €45,000, you’ll pay no BIK at all. Think you can’t get a decent electric car for less than €45,000? Think again. All of the following cars slip under – in some cases well under – the €45,000 barrier: the BYD Dolphin, Atto-3, and Seal; the Citroen E-C4, and E-C4X, and the E-Berlingo; the Cupra Born; the Fiat 500e and 600e; the Ford Explorer; the GWM Ora 03; the Hyundai Kona and Ioniq 5 (and the Ioniq 6 starts only barely over the €45,000 barrier); the Jeep Avenger; the Kia Niro EV; the Mazda MX-30; the MG4 and MG5; the Mini Cooper E; the Nissan Ariya and Leaf; the Opel Astra, Corsa, and Mokka; the Peugeot E-208, E-2008, E-308, and E-3008; the Polestar 2; the Renault Megane E-Tech and Scenic E-Tech; the Skoda Enyaq; the Smart #1 and #3; the Subaru Solterra; the Tesla Model 3 and Model Y; the Toyota bz4X; the Volkswagen ID.3 and ID.4 (and very nearly the ID.5 too); the Volvo EX30.
[ ‘Easier than pensions’: Why electric cars are the hot company perkOpens in new window ]
Now, some of those cars have tiny ranges of little more than 250km. Some will put as much as 600km between charge-ups. Some are good, some are bad, some we would say you should snap up right away and some we reckon you should run a mile from. All, however, have the same salient advantage – as things stand, right now, they will cost you nothing in BIK charges. Nada, zip, zero.
Even stepping up to a more expensive BMW, Mercedes or Audi EV might only leave you needing to pay a percentage of €5,000-€6,000 in BIK charges, so those posher brands are still on the table too.
Indeed, according to vehicle leasing and subscription experts DCEV, it’s one particular electric car that makes the best all-round sense for anyone getting a company car.
The salary sacrifice scheme for EVs in the UK has been a notable success, and company backed and fleet sales of electric cars have kept the market for battery-powered vehicles buoyant even as private buyers have started to shy away
“The best car in a BIK play, when you’re talking about a combination of value for money, daily driving, range, the best all-rounder is the Tesla Model 3, the standard version,” says DCEV’s Adrian Slattery. That means a high-tech, good-to-drive electric saloon, with a range of 513km on the official WLTP test, and a basic price of €40,990, can be yours at no extra tax cost.
Of course, it’s not just about the tax calculation. According to Slattery, there are other benefits to going EV, and not just for employees.
“Other benefits we’ve found whilst transitioning companies to EV fleets include collective remote charging, such as at an employee’s house, whereby the company gets the overall benefit of the carbon emission offset,” says Slattery. “Optically it shows the company’s clients that they’re serious and taking full responsibility for their carbon footprint.
‘Equally, there are other benefits, such as lower maintenance costs and the fact that – for the employee – they’re nicer to drive, and usually come with higher specifications. But of course, the total cost of ownership is key for the bottom line of all our companies.”
Does that mean that you can’t run a company car with a combustion engine without it costing you too much? Not quite, but the best bet in that case is to go for a plug-in hybrid. You won’t get the discounted tax value that an electric car driver will enjoy but the best PHEV models have emissions low enough to get you into the lowest band, Band A, for BIK and if you’re racking up more than 48,000km per year, that means you’ll pay the lowest possible amount, 9 per cent, on the value of your car.
Of course, we ought not to just talk about company cars as an employment travel perk. There are other schemes, such as the Taxsaver Commuter Ticket, where big savings can be made on bus, train, Luas, and Dart tickets. By using the scheme, employers can make a saving of up to 10.75 per cent on their PRSI payments, while the employee can save up to 52 per cent (and a minimum of 28 per cent) of the cost of their public transport travel.
[ EV purchase slump due to ‘perfect storm’ of charger and pricing problemsOpens in new window ]
Equally, there’s the cycle-to-work scheme, which allows employees to spend up to €1,250 on a pedal bike, up to €1,500 for an e-bike, and up to €3,000 for a cargo bike or cargo e-bike, and all of that expense is deducted from their salary before tax, PRSI, and Universal Social Charge, which amounts to a considerable saving compared to spending that cash out of taxed income.
That’s also the case for the Taxsaver Commuter Tickets, which is how such significant savings on the face value of the tickets can be made – you’re basically getting your PAYE, PRSI, and USC tax back on the value of the bike or the bus.
Such “salary sacrifice” schemes are also common in the UK, but as yet they’re not being used for company electric vehicle purchases – something that is available in the UK, and that lack of salary sacrifice for EVs is, reckons DCEV’s Adrian Slattery, a contributor to the shrinking of electric car sales in Ireland.
“We are lobbying to try and bring salary sacrifice to Ireland,” says Slattery. “Simply put, it’s when your employee, manager and/or directors can pay for their car before tax. This is massive in Great Britain and the biggest driver of the EV transition as a whole. In order to hit the goal of more than 900,000 electric vehicles on Irish roads by 2030 we need to make some radical moves.”
Certainly, the salary sacrifice scheme for EVs in the UK has been a notable success, and company backed and fleet sales of electric cars have kept the market for battery-powered vehicles buoyant even as private buyers have started to shy away. The same idea being implemented here could revive Ireland’s flagging EV market.
There are other calls to make sure that more tinkering with the BIK system doesn’t drive down the demand for electric cars, with Brian Cooke, the secretary general of the Society of the Irish Motor Industry, saying: “By extending the BIK incentive at current levels, and increasing the SEAI Grants back to 2022 levels until the EV market recovers, [we can] arrest this slide and reignite Ireland’s EV momentum.”
Changes to the BIK system are baked in right now – from 2026, the amount you can reduce the price of your company car for tax purposes falls to €20,000, and in 2027 it falls to €10,000. Will reducing BIK incentives strangle the market for electric company cars in Ireland? Possibly, but the best bet is to get your order in soon and make the most of the current advantages.
