The motoring world kind of kept its head down in the run-up up to Budget 2024, and it seems to have been passed by for the most part. The changes made were largely the extension of existing setups for VRT and electric car rebates, and the deferment of the re-application of excise duty to petrol and diesel.
That excise duty reinstatement — following the reduction in excise duty on fuel to help defray the cost of living crisis — was supposed to have happened at the end of this month, and would have put 8c on the price of a litre of petrol, and 6c on the price of a litre of diesel, with another excise rise due before Christmas.
Those two rises have now been put back, to April 1 next year and August 1.
It’s not all good news, though — the annual increase in carbon tax will see 3c put on the cost of a litre of fuel in the coming weeks, as petrol and diesel retailers re-stock their tanks. It means that the cost of a litre of fuel will still be coming perilously close to €2 and, given the turmoil in the Middle East right now, that’s unlikely to abate any time soon.
There was good news for company car users, though. The changes made to the Benefit In Kind (BIK) taxation system have been further extended, which means that you will continue to pay 0 per cent BIK tax on the cost of a new electric company car up to the value of €45,000. The ‘tapering’ of that benefit remains in place, though so that will fall to €35,000 in 2025, then €20,000 in 2026, and finally €10,000 in 2027 by which time most cars on sale will be fully electric — and hopefully rather more affordable as lower-cost models come on stream.
Speaking of electric vehicles, the VRT relief you get for buying an EV was due to expire at the end of this year but has been extended for a further two years out to the end of 2025. This means buyers of EVs with a value of €40,000 will continue to pay no VRT, while the tapering relief between €40,000 and €50,000 also remains in place.
While this is welcome, the motor industry in Ireland has repeatedly made the point that, given the stricture of production and ordering schedules, the Government really ought to be locking in incentives for three years, at minimum, in the future rather than leaving dealers and consumers on tenterhooks every October waiting to see if anything’s going to change. It’s such ‘best practice’ clarity that has helped markets such as Norway and The Netherlands generate massive EV take-up. At least this has happened in the company car sphere, with the accelerated capital allowance for EVs remaining in place, and in fact it has been extended for another three years.
In smaller news, there has been a one per cent reduction in the Motor Insurers Insolvency Compensation Fund levy, which is meant to create a ‘fighting fund’ in the event that a major insurer goes out of business.
Commenting on Budget 2024, The Society of the Irish Motor Industry (SIMI) Director General Brian Cooke: “SIMI welcomes the measures announced in today’s Budget, in particular the extension of the current VRT and Benefit-In-Kind reliefs for electric vehicles. In addition, the retention of the current VRT regime allied with the EV reliefs provides stability and clarity to the motor industry and motorists at a time of great uncertainty. The EV supports underline the Government’s commitment towards the electrification of the national fleet, which is of critical important as we strive to meet our emissions reduction goals. We still await clarification of the ongoing investment in both the charging infrastructure and the SEAI purchase grants, which are also vital to the ongoing success of the EV project.”
However, we can expect to see increases in motor tax in future budgets. The Government is predicting a 16 per cent fall in motor tax receipts — from €910 million this year to €765 million in 2026 — because of the move to lower-emissions and zero-emissions vehicles. That’s a financial hole that will have to be filled somehow.