Company Vehicle BIK changes from January 2026

Vehicle emissions and categories

BIK cash equivalent on the use of an employer-provided car will continue to be determined based on both the vehicle’s CO2 emissions and business kilometres undertaken. 

A new A1 category is being introduced for vehicles with zero emissions:

The percentage BIK rate for vans when calculating the cash equivalent continues to be 8%.

OMV reductions and electric vehicle incentives

The relevant percentage determined based on CO2 emissions and annual business kilometres should be applied to the Original Market Value (OMV), which is the price a vehicle could reasonably be expected to fetch if sold before its first registration. Finance Bill 2025 maintains the following OMV reductions: 

• A €10,000 reduction to the OMV (including all cars and vans) in categories A1-D will remain in place until 31 December 2026.  The reduction will continue on a tapered basis to 2028, i.e. €5,000 in 2027 and €2,500 in 2028. This reduction does not apply to vehicles in category E.
• An additional OMV reduction applies to electric vehicles i.e. €20,000 in 2026 and €10,000 in 2027. This means that an employee with an electric vehicle will benefit from an overall OMV reduction of €30,000 in 2026. This includes the €20,000 electric vehicle-specific reduction plus the temporary universal reduction of €10,000, i.e. a total OMV reduction of €30,000.

For example, if an employee is provided with an electric vehicle (CO2 emission 0g/km) in 2026 with an OMV of €50,000, the cash equivalent of the vehicle will be €20,000 (i.e. €50,000 less €30,000).

If the employee travels 35,000 business kilometres annually, the BIK rate under band A1 for this level of business mileage will be 12%. Therefore, the employee will be subject to BIK notional pay of €2,400 (€20,000 x 12%) for the year.

Employer actions before 2026 

Employers should review company-provided vehicles now to ensure correct BIK rates are applied for the January 2026 payroll cut-off.  Impacted employees should also be notified of any relevant changes.

Charging facilities for electric vehicles 

An exemption from BIK currently applies when an employer provides a charging point for electric vehicles on their business premises, provided that the facility is available to all employees. 

There is also a BIK exemption to expenditure incurred by an employer in connection with the provision of a facility for the charging of an electric vehicle at a director’s or an employee’s home. 

For the exemption to apply, the director or employee must have the private use of an employer-provided electric vehicle. A further condition is that the employer must retain ownership of the charging facility.

Where an employer is currently providing a car to their employee and the employee is incurring home charging electricity costs, the employer may reimburse these costs incurred by the employee/director free of tax (on the condition that the employer retains sufficient supporting documents) - provided that the employer is only reimbursing for the running costs of that employer vehicle.