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As businesses continue to balance fleet costs, sustainability targets and driver needs, Budget 2027 outlined several measures that will influence vehicle funding and fleet planning decisions. From ongoing support for electric vehicles to changes in VRT and carbon taxation, understanding the impact of these announcements will help businesses make informed fleet decisions.
Here’s what you need to know.
Vehicle Registration Tax (VRT)
Electric Vehicles VRT
In support of increasing the number of electric vehicles on our roads, the €5,000 VRT relief for electric vehicles which was due to end on 31st of December 2026, is being extended for two years to end-2028. This will allow businesses a longer window to assess their fleet options and incorporate electric vehicles into their fleet replacement schedules.
VRT on Category A vehicles bands 3-20
From 1 January 2027, the Category A Vehicle Registration Tax percentage rates, used to calculate the CO2 component of the charge, are being increased. The percentage rates applicable to bands 3 to 20 inclusive (cars with CO2 emissions of more than 80g/km) are being increased by 1 per cent. The rates applicable to bands 1 and 2 will remain unchanged.
With VRT increasing for this category, businesses may be looking more closely at how they manage vehicle costs and cashflow. Predictable monthly costs through leasing can provide greater certainty and help businesses manage the potential impact of higher upfront vehicle costs.
Carbon Tax
The Carbon Tax rate for petrol and diesel will remain at €71t/CO2 until 1 May 2027. It will then increase to €78.5 t/CO2.
Benefit-in-Kind (BIK)
While there was no mention of Benefit-in-Kind (BIK) for company cars in Budget 2027, the reliefs outlined in Budget 2026 remain in place until 2028.
The temporary relief for BIK of €10,000 to the Original Market Value (OMV) will remain at €10,000 in 2026. It will reduce to €5,000 in 2027 and €2,500 in 2028, being abolished from 2029.
Additionally, the Electric Vehicle relief will reduce from €20,000 in 2026 to €10,000 in 2027.
| 2026 | 2027 | |
| BIK Temporary Relief Vehicle Category A-D | €10,000 | €5,000 |
| Electric Vehicle Relief | €20,000 | €10,000 |