Embrace your inner cowboy – maybe not any more

It’s the Friday before the August bank holiday weekend, and very few are paying attention to the complete overhaul revenue have just released of the entire benefit in kind suite of rules.

Every single area liable to Benefit in Kind has come under review; most were updated to cover Covid-19 anomalies and incorporated a few sensible updates. However, there have been some clarifications to grey areas and some more widescale updates to motor vehicles.

Clarifications

Small benefit exemptions

The annual gift card purchased by many of our contractors remains in place, the €500 limit is also untouched, what has changed with these guidelines is that the use of a prepaid cards, that allow cash withdrawals. These have been removed from allowable expense lists and are fully open to standard tax rates if you buy one through your company.The Me2You cards we recommend are fully compliant with the updated guidelines, if you need further advice on how to avail of this, please reach out to your payroll account manager.

Course or Exam Fees

These can remain as business expenses as long as they are relevant to the business at hand. While we’re on the topic, many courses are available on our Iperks platform via our Icon Portal, either free of charge or at a significantly reduced rate.

We have seen a steady increase in contractors upskilling withing their roles

Medical Check-Ups

The provision of one medical check-up per annum, at the expense of an employer, will not be regarded as a taxable BIK.  If you feel the need to get the full overhaul, it can be paid by the company.

Updated rules

Motor Vehicles

Motor Vehicles have seen a major change, the focus is to make the biggest impact on the highest polluters

Crew Cabs have got a mention, this generally signals increased revenue scrutiny of an area of concern, so eyes peeled.

These have become very popular with business owners over the past 5 years and seem to have replaced the traditional 2 seat jeeps as the vehicle of choice. The commercial element of Crew Cabs was often used by motor dealers to get a sale across the line, and although these can be taxed commercially, revenue have decided to classify them as cars for the purpose of benefit in kind.

This has far reaching consequences for many company directors, and I would advise anybody who drives a company owned Crew Cab to review their benefit in kind rules immediately.

A company owned crew cab owner is likely to generate a real cost of on average of €6,000 per year under the new rules, this will increase further in 2023 when the calculation method changes to a Co2 based model.

An Irish Times headline from 2019 for Ford Rangers said “Embrace your inner cowboy” – a lot has changed in 2 years of the motor industry!

New rates

These will go live across all categories from 2023 onwards, with the greatest focus on the highest polluters.

5 new Vehicle bands have been created.

Category A is for super clean cars, covering the electric sector. We have covered electric vehicles in a separate article, please see here

Fossil fuel burning vehicles will fall into 4 separate categories depending on their levels of toxicity, with a range from 26.25% to a whopping 37.5% for vehicles where the Co2 emissions are higher than 179g/km (many crew cabs fall into this)

BIK on private use of Company vans will move to 8%

If you have any questions or concerns on this, we would be happy to help.

Please reach out to us on 01-8077106 or email us at info@iconaccounting.ie