Following Budget 2027, announced on Tuesday 6 October 2026, there are three things fleet managers and company car drivers need to plan for before January: EV VRT relief is extended, VRT is rising on most petrol, diesel and hybrid cars, and BIK reliefs step down as already legislated.
The key changes
| Measure | What was announced | Effective |
| EV VRT relief | Relief of up to €5,000 extended by two years | Now runs to 31 December 2028 |
| VRT on higher-emission cars | Rates up 1% for bands 3 to 20 (CO₂ above 80g/km) | 1 January 2027 |
| Benefit-in-Kind | No new measures; existing reliefs taper as already legislated | 1 January 2027 |
EV VRT relief extended to 2028
The VRT relief of up to €5,000 on electric vehicles, due to end on 31 December 2026, now runs to 31 December 2028.
For fleet managers: two more years of pricing certainty to build EVs into your replacement cycle.
For drivers: electric vehicles on your choice list will remain competitively priced.
VRT up 1% on bands 3 to 20
From 1 January 2027, VRT rises by 1% on cars emitting more than 80g/km of CO₂. That covers most petrol, diesel and hybrid models, including nine of the ten best-selling new cars, and adds roughly €300 to €500 to most popular models. Electric cars and lower-emission plug-in hybrids are not affected. The increase applies only to Category A passenger cars, so vans and other commercial vehicles are unaffected.
For fleet managers: VRT is charged at first registration, so your current fleet and existing rentals are not affected. Quotations for affected models registering in 2027 will be updated. If you have petrol, diesel or hybrid replacements due in early 2027, please contact your account manager to review your options.
For drivers: there is no change to your current vehicle. Replacement petrol, diesel and hybrid vehicles registered from January will carry a higher cost.
BIK: no Budget change, but a change in January
There were no new BIK measures, but the reliefs set last year step down on 1 January 2027. The universal OMV relief falls from €10,000 to €5,000 and the EV relief from €20,000 to €10,000, so most company car drivers will pay more BIK next year. The universal relief also applies to vans, so van BIK will rise too.
| €45,000 company car | BIK 2026 | BIK 2027 | Extra tax for the driver in 2027 |
| Electric (0g/km) | €2,250 | €4,500 | About €1,178 |
| Plug-in hybrid (30g/km) | €7,875 | €9,000 | About €589 |
| Diesel (130g/km) | €10,500 | €12,000 | About €785 |
Illustrative, for a higher-rate taxpayer: up to 26,000 business km a year, tax at a marginal rate of 52.35%. Drivers on lower incomes will see smaller increases.
For fleet managers: we recommend informing drivers ahead of the January payroll cycle. We can provide 2027 BIK estimates for each driver.
For drivers: most drivers will see an increase in their BIK liability from January. Electric vehicles remain the most tax-efficient company car option.
What to do now
1. Review upcoming orders. Check petrol, diesel and hybrid vehicles due around the turn of the year.
2. Revisit your choice lists. The cost case for electric is now stronger.
3. Communicate changes to drivers. Advise them of the BIK changes taking effect in January.
We are here to help
Your Mahony Fleet account manager can run the numbers on your fleet and upcoming renewals. Contact us at [email protected].
This article is a general summary of the Budget 2027 announcements and is not tax advice. Measures are subject to the Finance Bill being enacted.