Benefit-in-kind on a company car under the CO2 bands.
Annual tax on the car
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BIK percentage
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Taxable benefit
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Your breakdown
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A company car is taxed pay, not a freebie
If your employer gives you a car you can use privately, Revenue treats the private benefit as part of your pay and taxes it. That taxable amount is the benefit in kind, and it is calculated as a percentage of the car’s original market value, the list price when new, not what your employer paid. The percentage depends on two things: how clean the car is, captured by its CO2 emission category from A to E, and how many business kilometres you drive in the year. This calculator combines those to find the percentage, applies it to the original market value, and shows the annual tax cost.
Two features of the system surprise people. The benefit is based on the new list price even if the car is years old, and higher business mileage reduces the percentage rather than increasing it. The logic is that a car driven hard for work delivers less of a private perk per kilometre, so the heavier your genuine business use, the lower the taxable slice. The tool uses four mileage tiers, with the percentage stepping down as you cross 26,000, 39,000, and 48,000 kilometres a year.
A €35,000 car, band A, 30,000 business km
Take a band A car with an original market value of €35,000, driven 30,000 business kilometres a year, with the driver a higher-rate taxpayer. At 30,000 kilometres the car falls in the second mileage tier, which for band A gives a benefit-in-kind percentage of 18 percent. Applied to the €35,000 value, the taxable benefit is €6,300. That €6,300 is then taxed like any pay at the 40 percent income tax rate plus the 8 percent top USC rate plus 4.1 percent PRSI, a combined 52.1 percent, which works out at about €3,282 of tax for the year on the car.
The electric car break
Electric vehicles get meaningful relief. The tool applies a €35,000 reduction to the original market value of an electric car before the percentage bites, which can wipe out the benefit entirely on a modestly priced EV. Tick the electric box and you will see the taxable benefit fall, often to zero on a car valued at or below that relief. This is a deliberate policy nudge toward cleaner company fleets and is one of the strongest reasons to choose an electric company car over a petrol or diesel equivalent.
A caveat on the temporary value reduction
One caveat on accuracy. In recent years there has been a temporary universal reduction to the original market value for BIK purposes, applied on top of the EV relief as a cost-of-living measure. This calculator does not apply that temporary reduction, so for a year in which it is in force the real taxable benefit, and therefore the tax, would be lower than the figure shown here. Treat the result as the position under the standard CO2 and mileage rules, and check whether any temporary relief applies in the year you are looking at before relying on the number.
How do I get into a lower BIK percentage band?
There are two routes: drive more genuine business kilometres, which steps you down through the mileage tiers, or choose a lower-emission car, which moves you to a cleaner CO2 category. Both reduce the percentage applied to the list price. The single biggest move is going electric, because the value reduction usually beats anything you can achieve through mileage alone.
Is a company van taxed the same way as a car?
No, vans are treated more favourably. A company van available for private use is taxed on a flat percentage of its original market value rather than on the CO2 and mileage table that applies to cars, and the van percentage is lower. This tool models cars, so do not use it for a van, where the charge and the rules differ.