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There are several tax incentives available for the purchase of electric company cars introduced by the Government, to drive motorists towards a more fashionable, cleaner, and greener motoring.

At McMahon and Co., we have had numerous enquiries in relation to tax incentives available to businesses on purchasing electric vehicles.

To help with this matter, here are a few of the main requirements for accessing these incentives:

Qualifying Conditions

To qualify for tax reliefs, there are numerous obligations you will need to meet:

• The original market value of the car must be under €50,000 to qualify for benefit-in-kind (BIK)
• The car must be powered by an electric motor only
• The car must be new to benefit from the 100 per cent claim for capital allowances in the first year
• The car must also be on the Sustainable Energy Authority of Ireland (SEAI) register of electric cars to claim 100 per cent capital allowances

If you qualify for all the above, you will have the opportunity to utilise tax incentives. Here are a few of the benefits that you can make use of:

Capital Allowances

The claim for the accelerated 100 per cent allowance is based on the actual cost of the vehicle or the specified amount of €24,000 – the maximum you can claim is €24,000.

The allowance can be claimed for the accounting period in which the vehicle was first provided and used for the trade, this will be the year you bought the car. If the vehicle is more than €50,000, BIK is only paid on the excess over €50,000 and not on the original market value.

VRT Benefits

Vehicle registration tax (VRT) relief can also be applied if the vehicle matches VRT categories A and B. To qualify for this, the vehicle must be:

• A series production passenger car or commercial vehicle
• Powered solely by an electric motor
• Registered before 31 December 2021

Once these requirements are met, you will be eligible for relief from VRT for up to a maximum amount of €5,000.

However, please note that series production electric motorcycles are exempt from VRT until 31 December 2021.

Government Grants

There are grants available for electric company cars with a Government incentive of up to €5,000 grant per vehicle.

There are also several grants available to business owners for purchasing electric company cars and the installation of chargers at the home. This offers a Government grant of up to €600.

There is also a grant of up to €7,000 available for the purchase of an electric vehicle for use as a Taxi, Hackney or Limousine.

VAT

Existing reliefs, such as VAT, can be reclaimed on a vehicle that is category B or C for VRT purposes, such as a commercial vehicle.

Some Jeeps will qualify as a commercial vehicle for VAT. Although, they will not meet the definition of a van for BIK purposes.

Generally, VAT cannot be reclaimed on passenger vehicles. However, 20 per cent of VAT can be reclaimed on a passenger vehicle that:

• Are used for at least 60 per cent business purposes
• Were first registered on or after 1 January 2009
• Has CO2 emissions of less than 156g/km

Capital allowances can be difficult to compute. At McMahon and Co, we can assist with calculating these allowances for your business and ensuring that the most advantageous claims are made. We do so by advising on matters such as the timing of purchases and sales of capital assets.

For more help or advice from McMahon and Co. on these tax incentives, contact our team today.