Budget 2025 has been announced in Dáil Éireann, featuring new measures affecting drivers and fleet managers.
We look at the main points relating to the fleet industry.
Key Points in Budget 2025 for Fleet Managers:
- BIK remains the same as 2024
- BEV Commercials to see €200 VRT Rate
- Carbon Tax is being increased by €7.50 per tonne
- ACA scheme threshold reduced to 140gCO2/km from 2027
- Motor Insurers Insolvency Compensation Fund levy reduced
BENEFIT-IN-KIND
Regarding the Benefit-in-Kind (BIK) regime for company cars, the temporary universal relief of €10,000 to the Original Market Value (OMV), first introduced in 2023, is being extended for Budget 2025.
For an electric company vehicle employee, the overall BIK relief of €45,000 in 2025 will comprise the €35,000 electric vehicle-specific relief (already in legislation) plus the additional temporary universal relief of €10,000. 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.
A BIK exemption will also apply to providing electric vehicle chargers at a director’s or employee’s home. This applies when a company incurs an expense in connection with providing a facility for electric charging vehicles at the employees’ homes.
COMMERCIAL VEHICLES & EVs
An amendment will be made to VRT so buyers can qualify for the €200 VRT Rate on Battery Electric Vehicle Commercials. At present, many BEV Commercials exceed the weight limit for the lower tax rate. 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 1 January 2025.
Mr Chambers told the Dáil that BEV commercials are currently at a “competitive disadvantage” compared to petrol and diesel commercial vehicles due to their battery weight.
An ‘emissions-based approach to VRT for Category B Commercial Vehicles’ will also provide a lower 8% rate for Category B Vehicles with CO2 emissions of less than 120g/km, down from 13.3%.
|
0g/km up to and including 120g/km |
8% or €160, whichever is the greater |
|
More than 120g/km |
13.3% or €266, whichever is the greater |
“Category B includes commercial vehicles designed and constructed for the carriage of goods that do not exceed 3.5 tonnes. These vehicles are European category N1 and generally have three seats or less.”
CARBON TAX
Carbon Tax is being increased by €7.50 per tonne. From Wednesday, October 9, the rate per tonne of carbon dioxide emitted by petrol and diesel will increase from €56 to €63.50 per tonne.
According to the Irish Times, which spoke to Fuels for Ireland, the changes will cost motorists an additional €12 per full tank.
ACA THRESHOLD REDUCED
The Accelerated Capital Allowances (ACA) max threshold on vehicles will be decreased from 150g CO2/km to 140g CO2/km by January 2027 to incentivise a move to less CO2-producing vehicles. 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 permissible for vehicles with CO2 emissions of 121-140g/km. There will be no allowable expenditure for vehicles with emissions >141g/km.
INSURANCE
The Motor Insurers Insolvency Compensation Fund levy will be reduced from 1% to 0% from 1 January, which may reduce Insurance Premiums for 2.2 million policyholders in 2025.
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