What Budget 2021 means for motorists

Public Expenditure Minister Michael McGrath and Finance Minister Paschal Donohoe have just presented the 2021 Budget. From fuel tax to VRT, here’s everything motorists need to know…

There were no real surprises in the budget and as expected the main focus was on public health spending in light of the coronavirus. The key take out for motorists is that fuel will increase, so too will motor tax for some motorists and new car buyers will face higher prices on larger and more emitting models. Here’s our summary of what the changes mean for you…


1) VRT
Changes to the VRT tax bands means that there will now be a new 7% rate for EVs and a 9% rate for PHEVs. In addition, the current 11 bands would increase to 20 with a new top rate of 39% applied to all vehicles with emissions over 191g/km. In essence, we will see new car buyers who opt for more sustainable vehicles such as hybrid electrics and EVs benefit with better value through lower VRT, while petrol and diesel cars with higher emissions will be more expensive. The most impacted will be larger vehicles including SUVs, for example the VW Tiguan will see a minimum increase of just under €4,000.

2) Fuel increase
The decision to increase carbon tax will see an increase of  €1.30 to an average 60-litre tank of petrol and €1.51 to a tank of diesel.

3) Motor tax
In line with VRT changes the motor tax bands will be tweaked. The good news is that 88% of motorists will see no increased taxes,  7% of drivers of mostly older vehicles will have to pay an extra €10 a year while an extra charge of €30 to €50 is in store for around 4% of motorists driving high emitting vehicles. Motor Tax rates will remain unchanged for all cars in the engine sized regime


4) Increase in the Nox charge
A change to the bands of the NOX charge will mean that the lower €5 rate per mg/km would only apply to the first 40mg/km and not up to 60mg/km as it is currently. This applies to all cars when first registered, i.e. new cars and imports.


5) Electric & Hybrid Cars
That €5,000 VRT rebate for EVs will only apply to cars costing up to €40,000 and will then be tapered up to €50,000, it will not apply to cars in excess of €50,000.  The €1,500 VRT rebate for hybrids and €2,500 plug-in hybrids is to be phased out by the end of this year.


6) Imported Used Cars
Used imports will have their CO2 values uplifted to a level equivalent with the new WLTP test to which all new cars are subject so VRT and Motor tax is set to increase. e.g. below

Petrol    y = x(0.9227) + 34.554
Diesel    y = x(1.1405) + 12.858

An NEDC tested petrol car with a CO2  value of 110g/km on the vehicle registration documentation would under the current system attract a rate of 16%. Revenue will now recalculate this value to a new CO2 value that is  equivalent to a WLTP as follows

y=110(0.9227) + 34.554   y= 134
The car is then subject to an 18% VRT rate


13th October 2020

Geraldine Herbert


Author: Geraldine Herbert

Contributing Editor and Motoring Columnist for the Sunday Independent and editor of wheelsforwomen. Geraldine is also a regular contributor to Good Housekeeping (UK) and to RTÉ Radio One, Newstalk, TodayFM and BBC Radio. You can follow Geraldine on Twitter at @GerHerbert1

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