Company Car vs Personal Car: Mileage Rates and BIK Explained
Personal car for business travel = civil service mileage rates (tax-free). Company car for business travel = no mileage claim; the employee pays Benefit-in-Kind (BIK) tax instead. These are two completely separate schemes. You use one or the other, never both.
The Two Schemes at a Glance
Personal Car
- Employee owns/leases the car personally
- Employee pays for fuel, insurance, tax, maintenance
- Employer reimburses at civil service rates per km
- Rates cover ALL running costs (fuel, wear, insurance, depreciation)
- Progressive bands apply
- Tax-free for employee, reported under ERR
Company Car
- Employer provides the vehicle (owned or leased)
- Company pays for fuel, insurance, tax, maintenance
- No mileage claim -- company already pays for the car
- Employee pays BIK tax on personal use value
- BIK % based on Original Market Value and annual business km
- More business km = lower BIK percentage
Company Car BIK Rates
BIK is calculated as a percentage of the car's Original Market Value (OMV). The percentage depends on two factors: the vehicle's CO2 emission category (A1 through E) and the employee's annual business kilometres. More business travel = lower BIK. Lower emissions = lower BIK.
| Business km | A1 (0g) | A (1-59g) | B (60-99g) | C (100-139g) | D (140-179g) | E (180g+) |
|---|---|---|---|---|---|---|
| 0 -- 26,000 | 15% | 22.5% | 26.25% | 30% | 33.75% | 37.5% |
| 26,001 -- 39,000 | 12% | 18% | 21% | 24% | 27% | 30% |
| 39,001 -- 48,000 | 9% | 13.5% | 15.75% | 18% | 20.25% | 22.5% |
| 48,001+ | 6% | 9% | 10.5% | 12% | 13.5% | 15% |
OMV reductions for 2026: A €10,000 reduction to the Original Market Value applies for categories A1, A, B, C, and D (not E). Electric vehicles (Category A1) receive an additional €20,000 OMV reduction on top — total €30,000 off OMV before the percentage is applied.
CO2 categories (g/km): A1 = 0g, A = 1-59g, B = 60-99g, C = 100-139g, D = 140-179g, E = 180g+. Source: Revenue.ie, effective from 1 January 2026. BIK rates can change in each Finance Act — verify with your accountant.
The Grey Areas
Employee pays for fuel in a company car
Some employers provide a car but don't pay for fuel. The employee can claim actual fuel costs for business travel (receipted) but NOT civil service mileage rates. The mileage rates are designed to cover all costs including the vehicle itself -- not just fuel.
Uses personal car some days, company car other days
Each trip is assessed individually. Personal car trips = civil service rates. Company car trips = no claim. Keep clear records of which vehicle was used for each journey. Don't mix them up.
Cash allowance instead of a company car
If the employer pays a "car allowance" (a cash sum in lieu of providing a company car), this is taxable income -- PAYE, USC, PRSI apply. The employee then uses their personal car and can claim civil service mileage rates for business travel on top. The allowance and the mileage are separate.
Electric company cars
Reduced BIK applies for EVs (Category A1). For 2026: €10,000 standard OMV reduction + €20,000 additional EV reduction = €30,000 off OMV before the BIK percentage is calculated. A1 rates are also the lowest (15%/12%/9%/6%). The employee still cannot claim mileage rates. See our EV mileage guide for personal EV rates.
Which Is Cheaper for the Employer?
Low mileage (under 15,000 km/year)
Mileage reimbursement is usually cheaper.
At Band 1-2 rates, a 10,000 km employee costs ~€7,000/year in mileage. A company car costs lease + insurance + tax + fuel + BIK administration -- typically more.
High mileage (over 25,000 km/year)
Company car often becomes cheaper.
Band 3 and 4 rates are low (€0.39 and €0.26/km), so mileage reimbursement drops -- but the employee still needs a reliable car. A company car ensures the vehicle is suitable and maintained.
Worked comparison: 20,000 km/year
Band 1: €777, Band 2: €3,625, Band 3: €5,690
Lease ~€8,000 + fuel/insurance ~€3,000. OMV reduced by €10,000 = €25,000. BIK to employee: €25,000 x 30% = €7,500 taxable.
Similar total cost but very different tax treatment. Personal car is slightly cheaper for the employer at this mileage level, and the mileage reimbursement is tax-free to the employee.
Frequently Asked Questions
Related Resources
Managing Personal Car Mileage Claims?
Expense.ie tracks progressive band rates per employee, handles band crossings automatically, and generates ERR exports. For teams where employees use personal vehicles for business travel.
30-day money-back guarantee. No long contracts.