Tag: company_car

Tax on company cars causes increased carbon emissions!

I was speaking to a sales rep yesterday who was driving a company car. He told me about the Irish government’s scheme to tax people for receipt of company cars. It is called Benefit in Kind (BiK).

Basically, if your employer gives you a company car, you are liable to pay 30% of the original market value of the car in tax (the original market value includes the amount the government already collects in VRT!).

However, if you do more than 15,000 per annum, the amount of BiK you have to pay drops. The more mileage you do, the less BiK you have to pay (up to a ceiling at 30,000 miles).

Sounds fair, you might say. These people are using the cars the company gave them.

Possibly, until you realise that what this law does is incentivise company car owners to use their cars more to drive to meetings (for example) where they might otherwise have taken a more carbon friendly alternative (telecon anyone?). The rep I was talking to said he will preferentially drive anywhere to get his mileage up!

If you want to tax company cars, why not do it on the basis of their carbon footprint (or engine size if that rating isn’t easy to come by). Something like €500 for cars 1.6L and less; €2,500 for 1.6L to 2L; €6,000 for 2L to 3L and €12,000 for 3L and above index linked.