For farmers and other business owners, the provision of non-cash benefits can be a useful way to reward employees. While there are relatively few benefits that are tax-efficient for both employer and employee, the provision of electric vehicles is worth considering as Government grants and incentives can result in substantial cost savings.
The advantages of electric vehicles include lower fuel costs, lower road tax and insurance, and fewer maintenance and repair bills. Yet, Department of Transport figures cited in a recent Parliamentary Budget Office report show that at the end of 2021, there were just 47,721 electric vehicles in Ireland, comprised of 23,333 battery electric vehicles and 24,388 plug-in hybrid electric vehicles. This is well below 2% of the total national fleet. However, this year’s spiralling fuel costs may stimulate stronger interest in the months ahead.
Incentives to purchase electric vehicles
A list of grants and incentives available for electric vehicles is available on the Government website. They include:
Up to €5,000 towards the purchase of new battery electric vehicles (BEVs). A grant eligibility price cap of €60,000 applies.
Up to €600 to install a home charger unit for new and second-hand BEVs or PHEVs.
VRT relief of up to €5,000 for BEVs until the end of 2023.
BEVs qualify for the lowest tax band of motor tax at €120 per annum, while a PHEV is typically taxed at circa €170 per annum.
Tolling reductions of 50% for battery electric vehicles and 25% for plug-in hybrid electric vehicles.
BEVs qualify for a 0% Benefit-in-Kind rate up to €50,000 without mileage conditions. This will be extended out to 2025 with a tapering effect on the vehicle value. This measure will take effect from 2023. For BIK purposes, the original market value of an electric vehicle will be reduced by €35,000 for 2023; €20,000 for 2024; and €10,000 for 2025.
Grants are accessed via the dealer but information about which vehicles are eligible and where dealers are located is available from the SEAI.
Accelerated Capital Allowances
Until the end of 2024, farmers, along with other businesses, can claim 100% Accelerated Capital Allowances (ACA) for investments in energy-efficient products and equipment, including electric vehicles and associated EV charging equipment. The scheme, which includes gas vehicles and refuelling equipment, was extended in Budget 2022 to hydrogen-powered vehicles and refuelling equipment. However, plug-in hybrid electric vehicles no longer qualify for ACA support as of 1 January 2022.
Is an EV right for your employees?
With fuel costs rising, the grants and incentives mentioned above merit serious consideration, particularly If your employees and directors have low annual mileage. To find out more about how your business could benefit, please contact a member of our team.