Ezine on Motor BIK and Minimum Wages changes from 1 January 2023, and Residential Zoned Land Tax update

Minimum Wage – Upcoming changes

The minimum wage will increase from 1st January 2023. The national minimum wage for people aged 20 and over will increase by 80c to €11.30 per hour

Residential Zoned Land Tax

The Residential Zoned Land Tax (RZLT) was introduced by the Finance Act 2021 and will come into effect from 2024, managed by the Revenue Commissioners. RZLT will operate on a self-assessment basis. If you own land liable to RZLT, you must register for the tax.

It is calculated at 3% of the market value of land within its scope. You must file a return and pay any RZLT due for 2024 by 23 May 2024.

Each local authority has now published maps identifying land within the scope of RZLT.

Supplemental and final maps will be published in 2023. Local authorities will update these maps annually from 2025 onwards for changes in the zoning and servicing status of land.

Submissions can be made to the local authority to exclude land on a map, or to include land which is not shown on a map, by 1 January 2023.

An appeal can be made to An Bord Pleanála if you disagree with the local authority decision.

From 1 January 2023, Benefit in Kind (BIK) on company cars will be calculated with reference to CO2 emissions

These changes may increase costs for both employers and employees where the vehicle is in the higher CO2 emissions bracket.

Benefit-in-kind: Effect on Company Cars from 1 January 2023

The new rules in 2023 will apply to all cars (including electric vehicles, see further detail below), whether the car is acquired in 2023 or was made available to employees in earlier years of assessment.

From 2023 onwards, the BIK cash equivalent on the use of an employer provider car will be determined based on both the business mileage undertaken and the vehicle’s CO2 emissions. Please find details below:

1. The amount of business mileage and CO2 emission category

1. The CO2 emissions category of the car is as per the following table:

Benefit-in-kind: Effect on Company Vans from 1 January 2023

For the year of assessment 2023 and onwards the cash equivalent for vans will increase from 5% to 8% of the Original Market Value (OMV).

Benefit-in-kind: Effect on Electric Vehicles from 1 January 2023

The Department of Finance announced in Budget 2022 the phasing out of the 0% BIK on Electric Vehicles over the next 4 years.  Finance Act 2021 extended the favorable BIK regime for certain electric vehicles made available to employees in the period from 1 January 2023 to 31 December 2025.  The relief from the BIK charge arising during this period applies on a tapered basis.

For an electric vehicle made available for an employee’s private use during the years 2023 – 2025, the cash equivalent will be calculated based on the actual original market value (OMV) of the vehicle reduced by:

• €35,000 in respect of vehicles made available in the 2023 year of assessment;
• €20,000 in respect of vehicles made available in the 2024 year of assessment; and
• €10,000 in respect of vehicles made available in the 2025 year of assessment.

If the reduction reduces the OMV to Nil, a BIK charge will not arise. Any portion of OMV remaining, after the reduction is applied, is chargeable to benefit-in-kind at the prescribed rates.

Further Revenue Guidance can be found in the Revenue Tax and Duty Manual Part 05-01-01b:

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-01b.pdf