The rules around company cars and tax have changed quite a bit in recent years, especially when it comes to electric vehicles (EVs). To encourage more businesses and employees to switch to electric, the Finance Bill 2024 introduced updates that reduce the taxable value (known as BIK, or Benefit-in-Kind) for EVs.

Here’s a simple breakdown from the Nevo team on how BIK is calculated for electric company vehicles and what the latest updates mean for you.

BIK on company cars is determined by:

1. The car’s CO2 emissions (EVs fall into the lowest emission band: 0g/km).

2. Annual business mileage (the more business kilometres driven, the lower the BIK rate).

3. Original Market Value (OMV) of the vehicle.

For electric vehicles, there are significant BIK reductions to lower the tax liability:

• Up to 31 December 2025, a €45,000 reduction applies to the OMV of an EV (€35,000 EV-specific reduction + €10,000 universal reduction).

• From 2026, the EV OMV reduction drops to €20,000, and in 2027, it will decrease further to €10,000.

Example Calculation

Let’s say your employer gives you an electric vehicle in 2025, and it has an OMV of €50,000.

• Subtract the €45,000 BIK reduction. The taxable value is now €5,000.

• If you drive over 30,000 business kilometres, your BIK rate (in Band A) is 18%.

• Your annual BIK tax amount = €900 (€5,000 × 18%).

BIK Exemptions for EV Charging Facilities

A BIK exemption currently applies when an employer provides a charging station for electric vehicles on business premises, as long as the facility is accessible to all employees. The Finance Bill 2024 extends this exemption to include expenditure incurred by an employer for the installation of a charging facility at an employee’s or director’s home, effective 1 January 2025.

For the exemption to apply:

• The employee or director must have private use of an employer-provided electric vehicle.

• The charging facility must remain owned by the employer. Additionally, if an employer provides a company car and the employee incurs electricity costs for home charging, the employer may reimburse these costs tax-free, provided that:

• The reimbursement covers only the running costs of the employer-provided EV.

• The employer maintains sufficient supporting documentation.

Choosing an electric company car isn’t just the sustainable decision, it’s a smart financial one too. With lower tax through BIK reliefs, reduced fuel and maintenance costs, and strong government support, electric vehicles make great sense for employees and employers alike. At Nevo, we believe EVs are the future of business travel, better for your wallet and better for the planet.