The 2025 budget was announced by Minister for Finance Jack Chambers and the Minister for Public Expenditure Paschal Donohoe. From fuel hikes to VRT, here’s everything motorists need to know writes Geraldine Herbert
Benefit-in-Kind (BIK)
For company car users, the temporary €10,000 BIK relief introduced in 2023 has been extended. Employees with electric vehicles will benefit from a total BIK relief of €45,000 in 2025. This will decrease to €20,000 in 2026 and €10,000 in 2027. Additionally, BIK exemptions are available for employers providing home chargers for electric vehicles.
Commercial Electric Vehicles
Starting January 1, 2025, the weight ratio requirement for commercial electric vehicles to qualify for the €200 VRT rate will be lowered from 130% to 125%. Additionally, from July 1, 2025, VRT for Category B vehicles (small commercial vehicles) will be calculated based on CO2 emissions. Vehicles emitting 0-120g/km of CO2 will face an 8% VRT rate, while those exceeding 120g/km will be charged 13.3%.
Fuel Price hikes
As part of Budget 2025, the carbon tax on fossil fuels will rise by €7.50, bringing the total to €63.50 per tonne of carbon dioxide emissions. This increase will slightly raise the cost of fuel, adding an estimated €1.28 to an average fill of petrol and €1.48 to diesel, starting Wednesday, October 9th.
Emission Thresholds for Capital Allowances
Starting January 1, 2027, the classification for a low-emitting company car eligible for capital allowances will become stricter. The maximum emission level to qualify for this relief will be reduced from less than 155 grams of CO2 per kilometre to less than 140 grams per kilometre.
Home Chargers and Accelerated Capital Allowances
The accelerated capital allowances scheme for gas and hydrogen vehicles and refuelling equipment has been extended until the end of 2025, giving businesses an extra year to benefit from these tax incentives.
Vehicle Registration Tax (VRT)
Good news for car buyers: VRT and motor tax for passenger cars remain unchanged.
