Budget 2025 and the motor industry

Budget 2025, announced yesterday evening by Ministers Jack Chambers and Paschal Donohoe, contains some measures specific to motoring:

Petrol and diesel prices rise
The rate per tonne of carbon dioxide emitted for petrol and diesel will go up from €56.00 to €63.50 from next Wednesday, 9th October:

VRT

• No VRT increases for EVs or ICE Vehicles.
• N1 BEVs: The weight ratio requirement for battery electric vehicles to qualify for the category C VRT rate of €200 is being reduced from 130% to 125%. This amendment comes into effect from 1st January 2025.
• Emissions-based VRT for Category 3 Vehicles: A lower rate of VRT for Category B vehicles is proposed, outlined in the table below (This measure will be operational from 1st July 2025).

EVs
The existing SEAI EV Purchase Grant will remain in place at €3,500 for 2025. Budget 2025 includes a number of incentives in relation to Electric Vehicles; a new Benefit-In-Kind (BIK) concession on home charger installations; the change of the definition for light commercial electric vehicles that will allow more vans avail of the lower €200 VRT rate; the previously announced extension of the SEAI purchase grants; and the extension of the €10,000 threshold on BIK for cars for 2025 (€45,000 tax-free BIK on EVs).

Benefit-in-Kind
The Benefit-in-Kind (BIK) regime for company cars, is extended for a further year the temporary relief of €10,000 to the Original Market Value (OMV) which was first introduced in 2023. For an employee with an electric company vehicle, they will have an overall BIK relief of €45,000 in 2025 which comprises of the €35,000 electric vehicle specific relief (already in legislation) plus the additional temporary universal relief of €10,000. As things stand the total deduction for electric vehicles in 2025 will be €45,000 followed by a reduction to €20,000 in 2026 and €10,000 in 2027.

BIK treatment of Battery Electric Vehicle (BEV) home chargers: A BIK exemption is being made in circumstances where an employer incurs an expense in connection with the provision of a facility for the electric charging of vehicles at the home of a director or employee.

Accelerated Capital Allowances – Gas & Hydrogen Vehicles
The Accelerated Capital Allowances scheme for gas and hydrogen-powered vehicles and refuelling equipment provides a tax incentive for companies and unincorporated businesses who invest in such vehicles and equipment for the purposes of their trade. It is proposed to extend the relief for a further year, to 31st December 2025, to allow the Department of Transport time to review the climate policy objectives underlying the scheme and to determine its future trajectory.

Emission thresholds for vehicle capital allowances
The CO2 thresholds for claiming capital allowances on business cars are being adjusted downward in light of improved vehicle emissions standards. From 1 January 2027, an expenditure of €24,000 will be allowable for cars with CO2 emissions of 0-120g/km. A reduced amount of €12,000 will be allowable for vehicles with CO2 emissions of 121-140g/km. There will be no allowable expenditure for vehicles with emissions >141g/km.

It is proposed to recalibrate the emissions thresholds, as outlined below:

Fuel Tax Increases Disappointing
– Padraic Deane

I’m disappointed that the Government has chosen to put extra tax on motorists and businesses that largely need their vehicles for everyday use. Putting an estimated €12 on a tank of fuel is regressive and will just disadvantage hard working people and businesses more!

Just as they got behind the introduction of electric cars and vans before having an effective recharging network in place, their logic is again wrong. Without an efficient (and sadly often non-existent) public transport alternative, they think this punitive move will reduce carbon in the short to medium term. I can confidently tell you that they are wrong, again. It won’t.

Politically, they naively have no idea how many votes they’ll lose at forecourt check-out counters over this poor judgement.

EVs And The Budget
– Padraic Deane

It appears that emissions changes planned for 2027, are designed to incentivise uptake in the company car sector and invigorate the second hand EV market. Good luck with that, as the mayhem that surrounds second-hand EV values is much more complex than this will even dent.

A Benefit-in-Kind exemption that will provided for EV chargers at the home of a director or employee is constructive. Changes in respect of battery electric commercial (BEV) vehicles that will allow them equality for the €200 VRT rate, is logical and welcome.

Leaving current grant programmes for electric vehicles unchanged was essential, but if they were serious about getting anywhere near targets for EVs on the road, they should have double incentives.