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Today, we bring you a motor-related summary from yesterday’s budget announced by the Minister for Finance, Jack Chambers.
The majority of the measures in Budget 2025 for the Motor Industry fall under the heading of Taxation Measures to Support Climate Action, with the focus on managing and reducing emissions. We have summarised the key aspects for you below:
Benefit-in-Kind (BIK)
With Benefit-in-Kind (BIK) for company cars, the temporary relief of €10,000 to the Original Market Value (OMV) has been extended for a further year.
Employees with an Electric Vehicle will benefit from an overall BIK of €45,000 in 2025 – which includes the €35,000 electric vehicle specific relief, as well as the €10,000 OMV relief.
BIK on BEV Home Chargers
The Government have also introduced a BIK exemption for 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.
VRT
We are delighted that there are again no VRT increases for either EV or ICE Vehicles.
Coming in to effect from 1st of January 2025, the weight carriage ratio for electric commercial vehicles is being reduced from 130% to 125% to enable them to qualify for the Category C VRT rate of €200.
As part of the taxation measures to support Climate Action, an emissions-based approach to VRT for Category B vehicles is also being introduced. The proposal will introduce a lower rate of 8% for vehicles with CO2 emissions of less than 120grams per kilometre. This will come into effect as of 1st of July 2025, with a view to incentivising the uptake of lower emissions vehicles.
Accelerated Capital Allowances
The accelerated capital allowances scheme for gas and hydrogen-powered vehicles for energy-efficient equipment will be extended for a further year to 31st of December 2025. This is 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 1st of 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.
Carbon Tax
The rate per tonne of carbon dioxide emitted for petrol and diesel will increase again from €56 to €63.50 from 9 October as per the trajectory set out in the Finance Act 2020. The increase will be applied to all other fuels effective from 1st of May 2025.