Budget 2024 and Electric Vehicles Explained

Budget 2024 has announced some updates to taxation on electric vehicles, which we've summarised in our monthly tax tips to help our clients stay informed!

  • Budget

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


OMV: €50,000

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

Tax at marginal rate of 52%: €1,755


OMV: €50,000

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

Tax at marginal rate of 52%: €3,510


OMV: €50,000

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

Tax at marginal rate of 52%: €4,680


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.

Shauna McEntee

Shauna McEntee


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