A Guide to Purchasing a Vehicle through your Limited Company

Yes. The Company may purchase a vehicle once it is for business use.

Yes. You may drive the vehicle for both business and personal use.

If the vehicle is owned by the company then all expenses relating to the vehicle can be expensed through the company.  These include fuel, repairs, insurance and tax.

You cannot claim the full cost of the cost of vehicle in 1st Year of Purchase. Should you purchase a vehicle outright, you may claim capital allowances (Depreciation) at a rate of 12.5% of the vehicle cost each year you own the vehicle.

The calculated value is limited to €24,000 in Vehicles with CO2 Category A, B & C.

It reduces for Category D & E by 50% and is not allowable for Category F & G.

Yes. These payments can be fully written off however they may be reduced pro-rata if vehicle cost exceeds €24,000.

Yes. It would just mean you would have a Corporation Tax charge of approx. 12.5% of the difference over the period of the purchase, so it would still make sense.

Yes. It is treated same as other vehicles; however, it will not have the same restrictions as passenger vehicles, i.e.
€24,000 limit.

BIK is a tax charge on an employee or Director where they have a company vehicle available to them for private use.

It is calculated by taking the OMV (Original Market Value) of a vehicle and multiplying it by 30%.

OMV = €40,000
Rate = 30%
BIK = €12,000 (Cash equivalent)

OMV (Original Market Value) is the cost of the vehicle if it was purchased new.

No. It is calculated on the price when purchased new.

No. €12,000 is the taxable benefit attached to the private use of the vehicle and you will be pay tax on €12,000 cash equivalent at your marginal rate of tax.

BIK: €12,000
Marginal Rate: 49%
Tax charge: €5,880

Yes. Should you have a lot of business kilometers then you may reduce the BIK % as per below table:

Lower Limit                 Upper Limit                     % of OMV

KM                               KM                                 Percent

zero to                         24,000                            30

24,000                         32,000                            24

32,000                         40,000                            18

40,000                         48,000                            12

48,000                          more                                6

* OMV - Original Market Value

Business mileage is mileage incurred in the normal course of business. This could include traveling to appointments, business meetings and traveling to temporary work sites.

Traveling to and from your normal place of work does not count towards business miles.

If you have a Contract for Service in place with a client and it is stated that you attend work on their site or by arrangement you carry out duties there, then the client site would be classed as your normal place of work.

Yes, However for Commercial Vehicles and Vans the rate of BIK is reduced to 5%. Note a N1 Commercial Vehicle with 5 seats is classified as passenger car for purposes of BIK

The Finance Act 2017 allows for an exemption to BIK on Electric cars for the year 01/01/2018 to 31/12/2018

Unfortunately Vehicles cannot be purchased through these company structures as they are shared with other members and the disposal of vehicles at end of Contract can be complicated. If you wish to purchase a vehicle, please contact Icon and we can arrange to set you up with your own Limited company to organize

You should contact your Icon Account manager and we will give you a guide on the BIK calculation so you can do a cost-benefit analysis. When purchasing you need to register the vehicle in the company name rather than your personal name.

In many cases it is not tax efficient to purchase a passenger car through your Limited company due to the onerous levels of BIK. In these cases, the re-imbursement of Travel expenses through Civil Service Mileage rates is more efficient. If you are doing a large amount of business travel or wish to purchase an Electric or Commercial Vehicle it can be very efficient. One of our Accountants would be happy to go through this with you. The Revenue Commissioners have recently updated their Tax Briefing. 

We are expecting Revenue to do a full review of BIK on Motor Vehicles in 2018, with changes to the BIK structures expected for diesel and petrol vehicles. On the flip side the Minister for Finance is expected to extend the Zero BIK rate for Electric cards to 3 years in Budget 2019