Benefit-in-Kind Changes for 2026: Key Updates for Employers
The Government has confirmed several updates to Benefit-in-Kind (BIK) rules for company cars and vans, including changes to OMV reductions, mileage bands, and specific reliefs for electric vehicles. Below is a clear breakdown of the measures now taking effect and how they will apply from 2026 onwards.
Temporary Reduction in OMV
BIK on company cars is calculated based on the original market value (OMV) and CO2 emissions of the car, and the annual business travel.
BIK on company vans is calculated as 8% of the OMV of the van.
In March 2023, a temporary reduction of €10,000 in the OMV was introduced for company vans and category A, B, C and D cars. In addition, the lower limit in the upper mileage band was temporarily reduced by 4,000km from 52,001km to 48,001km. The OMV of a category E company car was not reduced by €10,000.
These measures were due to expire on 31 December 2025, but they have been revised as follows:
The lower limit in the highest mileage band will be permanently reduced from 52,001km to 48,001km from 1 January 2026.
The temporary reduction in the OMV for all vans and cars in categories A1, A, B, C & D is being extended on a tapered basis for 3 years until 31 December 2028 as follows:
| Year | 2026 | 2027 | 2028 |
|---|---|---|---|
| Temporary reduction in OMV | €10,000 | €5,000 | €2,500 |
Tapered Reduction in OMV for Electric Cars and Vans
An electric car or van means a vehicle that derives its power exclusively from an electric motor (i.e. a Battery Electric Vehicle (BEV) - it does not apply to hybrid vehicles). A tapered reduction in the OMV applies in respect of electric cars and vans.
This tapered reduction, which was introduced in 2023 and extended in 2025, in the OMV of employer provided electric cars and vans applies up to 2027 as follows:
| Tax Year | 2023, 2024 & 2025 | 2026 | 2027 |
|---|---|---|---|
| Tapered reduction in OMV of BEV | €35,000 | €20,000 | €10,000 |
The OMV of an electric van or an electric car also qualifies for the temporary reduction in OMV of €10,000 for 2026, as they fall within Category A1.
Summary of BIK Rates on Company Cars
A summary of the BIK rates on Company cars for 2026 is as follows:
These changes may affect payroll planning, vehicle choices, and cost forecasting for employers and employees alike.
If you would like guidance on how the updated BIK rules apply to your business or fleet, the NKC team is here to help.