Most Irish SMEs running a mix of company cars and grey fleet haven't recalculated the mix since the 2022 BIK reforms. The 2026 threshold change is the moment to do it.
On 1 January 2026, the lower limit of the highest annual-business-mileage band for company-car BIK dropped from 52,001 km to 48,001 km. That's a 4,000 km shift on a single threshold, and it changes the maths for any employee whose business mileage was sitting just above or below the old line.
Here's why it matters operationally - not just as a payroll change.
What changed, in plain numbers
The Irish company-car BIK regime calculates the taxable benefit using two inputs: the original market value of the car, and a percentage that depends on CO2 emissions and annual business mileage. The percentage drops as business mileage rises, because Revenue accepts that a heavily-used company car is more "business tool" than "perk."
Before 1 January 2026, the lowest-percentage band kicked in at 52,001 km of annual business mileage. From 1 January 2026, it kicks in at 48,001 km.
For an employee whose annual business mileage sits between 48,001 and 52,000 km, that's a step down in BIK percentage - usually somewhere between 3 and 5 percentage points, depending on the CO2 category. On a €40,000 OMV, that's a few hundred euro of annual tax difference per car.
That sounds small in isolation. The strategic implication is bigger than the per-car number suggests.
Why the change reframes the company-car-vs-grey-fleet decision
The reason most Irish engineering, surveying, and consulting firms run grey fleet rather than company cars is the BIK overhead. Grey fleet pays civil service mileage rates against actual kilometres driven for work. Company cars pay BIK on a percentage of the car's value, every month, regardless of usage.
For high-mileage employees, company cars usually win on total cost. For low-mileage employees, grey fleet usually wins. The threshold of "high enough" is where the BIK percentage drops far enough that the per-kilometre cost of a company car undercuts the civil service mileage rate.
The 48,001 km threshold pulls that crossover point lower. Some employees who weren't quite high-mileage enough to justify a company car under the old rules are now in the right zone under the new rules. And some company-car holders who were nominally high-mileage are now firmly in the cheapest BIK band, which makes the company car cheaper to operate than it was last year.
If you haven't recalculated either side, you're working from 2025 numbers in a 2026 regime.
Three Irish-engineering scenarios
Scenario 1: Eileen, the senior structural engineer with the salary-sacrificed EV
Eileen drives a 2024 Polestar 2 on salary sacrifice. Her annual business mileage runs around 35,000 km - high, but not in the top BIK band. Under the EV-specific reductions, her BIK is already low. The 2026 threshold change doesn't affect her because she's nowhere near 48,001 km.
Strategy: leave it alone. The EV is the right vehicle, the salary sacrifice is the right structure, the BIK is fine. No action.
Scenario 2: Tom, the project lead with the two-year-old diesel
Tom drives a 2024 Volkswagen Passat 2.0 TDI, company-owned, mid-tier CO2 category. His annual business mileage is around 50,000 km - which sat in the second-from-top BIK band under the old rules and now sits in the top band from 1 January 2026.
The percentage drops by roughly 3 points. On a €38,000 OMV, that's about €1,140 less BIK per year. Tom's net pay goes up by roughly €570 (assuming 50% marginal rate).
Strategy: the company car got materially cheaper to operate. If Tom was on the bubble for a switch to grey fleet, he isn't anymore. Keep the diesel.
Scenario 3: Niamh, the field-services lead with no company car
Niamh runs grey fleet - drives her own 1.6L diesel Skoda, claims civil service mileage. Annual business mileage around 55,000 km. At the current 1501cc-and-over rates, her reimbursement runs around €18,000-€19,000 per year, broken across the four bands.
Under the 48,001 km BIK change, putting Niamh into a company car would now sit in the top BIK band immediately. On a similar OMV to Tom's, her BIK cost to the firm would be lower than her current grey fleet reimbursement, and she'd get the car as a perk.
Strategy: the maths now favours moving Niamh to a company car if she's open to it. The 4,000 km threshold drop changed her case.
The reframe: BIK is a fleet-strategy question
BIK looks like a payroll line item, but the threshold change pulls the crossover point between company car and grey fleet down by 4,000 km of annual business mileage - enough to flip the right answer for a non-trivial slice of employees. That's a fleet-strategy decision sitting inside a payroll line.
If your last fleet-mix review was before 1 January 2026, you're working from stale assumptions. Even a quick recalculation - employee by employee, using current OMVs and last year's actual business mileage - usually surfaces two or three cases where the right answer changed.
The risk is slow leakage rather than anything dramatic. Every employee who's on the wrong side of the line is either paying more tax than they need to, or costing the firm more in mileage reimbursement than a company car would cost in BIK. Either way, it's a margin issue.
What I'd do this quarter
Pull a list of every employee currently in either category - company car or grey fleet. For each, find their last twelve months of business mileage. Map them onto the new 2026 BIK bands using their actual vehicle CO2 category. Compare the BIK cost to the firm against the projected grey fleet reimbursement at civil service rates.
Flag every case where the right answer has changed. Have the conversation with the employee. Most will be fine either way. Some will prefer to switch, and a few should switch even if they don't prefer to.
It's a half-day's work for a 30-person firm. The result is the right fleet mix for the 2026 tax year, instead of one that drifted out of date in January.
Where this fits in your wider compliance picture
Grey fleet has its own duty-of-care overhead - licence checks, insurance verification, and roadworthiness are the firm's responsibility regardless of whether the vehicle is owned or personal. The BIK change shifts the cost calculation, but it doesn't change the fact that grey fleet employers carry more compliance work than company-car employers do.
If the recalculation pulls a few people across the line into company cars, you've also reduced your grey fleet duty-of-care surface area. That's a nice side benefit nobody mentions. (For the people who stay on grey fleet, the duty-of-care work doesn't go away - it just stays the same. Having a written grey fleet policy is the documentation HSA inspectors look for.)
The bottom line
The 48,001 km threshold change is the kind of update that's easy to file under "tell payroll" and forget. It's worth more than that. For any firm running both company cars and grey fleet, the right answer for some employees changed on 1 January 2026, and the only way to find out which ones is to do the maths.
If you'd like a hand running the numbers - or you'd like to see what the grey fleet side of the picture looks like with a proper mileage system attached - book a 20-minute demo and we'll walk through it.
Last updated: 28 April 2026.
