📊 BIK Key Facts 2025
- Company Car BIK: Based on Original Market Value (OMV) and business kilometres
- Electric Vehicles: Reduced BIK rates with €35,000 OMV relief
- Tax Treatment: BIK is taxed as income at your marginal rate
- Common Exemptions: Bikes, health screening, staff canteens
- Records Required: Business mileage log for reduced rates
Benefit in Kind (BIK) is a tax charge on non-cash benefits you receive from your employer, such as a company car, health insurance, or accommodation. If you have taxable benefits, understanding how BIK works can help you manage your tax liability effectively.
Many employees don't realise that BIK can significantly affect their take-home pay, or that there are legitimate ways to reduce the tax burden. MyTaxRebate.ie helps employees understand and optimise their BIK position to minimise overpayment.
What is Benefit in Kind?
A Benefit in Kind is any non-cash benefit you receive from your employer in addition to your salary. The value of these benefits is added to your taxable income, meaning you pay income tax, USC, and PRSI on them just like regular pay.
Common benefits in kind include:
- Company cars: The most common and often most valuable BIK
- Employer-paid health insurance: Premiums paid on your behalf
- Company accommodation: Housing provided by your employer
- Low-interest or interest-free loans: Below market rate loans
- Gym memberships: When paid directly by your employer
- Company van for private use: If not restricted to business use
How Company Car BIK is Calculated
Company car BIK is calculated based on two main factors: the Original Market Value (OMV) of the vehicle and your annual business kilometres driven.
2025 BIK Rates by Business Kilometres
| Annual Business KM | BIK % of OMV |
|---|---|
| 0 - 24,000 km | 30% |
| 24,001 - 32,000 km | 24% |
| 32,001 - 40,000 km | 18% |
| 40,001 - 48,000 km | 12% |
| Over 48,000 km | 6% |
📋 Example: Company Car BIK Calculation
Employee with a €40,000 OMV car, driving 20,000 business km/year:
- BIK Rate: 30% (under 24,000 km)
- Taxable BIK: €40,000 × 30% = €12,000
- At 40% tax rate, this costs approximately €4,800-€5,500 in tax per year
Electric Vehicle BIK Relief
To encourage electric vehicle adoption, significant BIK relief is available for EVs. For 2025:
- OMV Reduction: €35,000 is deducted from the OMV before calculating BIK
- Practical Impact: An EV worth €50,000 is treated as having an OMV of €15,000 for BIK purposes
- Lower rates apply: Combined with business mileage reductions, EV BIK can be minimal
- Company van exemption: Electric vans may have a €0 BIK in certain circumstances
If you're considering a company car, the tax savings from choosing an electric vehicle can be substantial—often thousands of euros per year compared to a petrol or diesel equivalent.
BIK Exemptions: What's Not Taxable
Not all benefits are taxable. The following are either exempt from BIK or have special treatment:
- Cycle to Work scheme: Bicycles and safety equipment up to €1,500 (€3,000 for e-bikes)
- Employer pension contributions: Not treated as BIK
- Health screening: Annual medical check-ups provided by employer
- Staff canteen: Meals provided on employer premises
- Car parking at work: Not a taxable benefit
- Small benefits: Up to two non-cash benefits totalling €1,000 per year
- Tools for work: Equipment essential for your job
How to Reduce Your Company Car BIK
There are legitimate ways to minimise the BIK tax on a company car:
- Keep accurate mileage records: The more business kilometres you do, the lower your BIK percentage
- Choose an electric vehicle: Take advantage of the €35,000 OMV reduction
- Consider a lower-value car: BIK is based on OMV, so a cheaper car means lower BIK
- Make employee contributions: Payments you make towards the car reduce BIK
- Review if a car allowance is better: Sometimes a cash allowance works out cheaper
Frequently Asked Questions
Do I need to keep a mileage log?
Yes, if you want to benefit from reduced BIK rates based on business kilometres. You should record the date, start and end locations, purpose of trip, and kilometres for each business journey. Without records, Revenue may apply the highest rate.
Is commuting to work considered business mileage?
No. Travel between your home and normal place of work is personal, not business mileage. However, travel from work to client sites, or between business locations during the day, counts as business kilometres.
Can I claim tax back if I've overpaid BIK?
Yes. If your BIK has been calculated incorrectly—for example, if business kilometres weren't factored in—you may be entitled to a refund. MyTaxRebate.ie can review your situation and claim any overpaid tax going back four years.
How is health insurance BIK calculated?
If your employer pays for your health insurance, the gross premium (before tax relief at source) is added to your taxable income. You still receive the standard 20% tax relief on the premium, so the net BIK is the premium minus the relief amount.
What if I only have the car for part of the year?
BIK is calculated on a pro-rata basis. If you had your company car for may require additional processing time of the year, you only pay BIK on half the annual amount. This applies whether you're starting mid-year, leaving, or if the car is replaced during the year.
Don't Forget Other Tax Reliefs
While managing your BIK liability is important, don't overlook other tax reliefs you may be entitled to. Many employees with company cars also qualify for:
- Rent Tax Credit – up to €1,000 per year if you're renting privately
- Medical Expenses – 20% relief on GP visits, prescriptions, dental work
- Working From Home Relief – If you work remotely some days
- Flat Rate Expenses – Automatic deductions for certain occupations
Our comprehensive review checks for all available reliefs, not just BIK. Many clients find they're owed money from multiple sources they hadn't considered.
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