Budget 2025 Motoring Highlights

The big news to come out of today's budget for motorists was that petrol and diesel prices are set to rise from next Wednesday, October 9th, due to the ongoing increases in the rate per tonne of carbon dioxide. In essence the total tax per litre will rise by 21.6%, from 85.85 cents back in 2020 to 104.37 cents from October 9th. Diesel will increase by 27.4%, from 73.60 cents to 93.78 cents. Depending on the size of your vehicle tank and fuel type, this adds roughly between €1.30 and €1.70 to a full tank, at the pump.

VRT on electric commercial vehicles is set to change also to an emissions-based approach. As things stand, the heavy battery weight pushes many electric vans over the 3.5 tonne limit for the lower tax rate of €200. This change means category B vehicles with CO2 emissions of less than 120gms per kilometre should qualify for a lower 8 percent rate. This emissions-based calculation should make electric commercial vans more competitive with their combustion alternatives. For company car users, a reduction in the emissions level to qualify for vehicle capital allowances will change from January 2027, when cars must emit less than 141gms/km to qualify.

The current Benefit-in-Kind tax of €10,000 temporary reduction in the ‘Original Market Value’ of all vehicles with emissions below 180g/km, will remain in place until December 31st, 2025. Employees with the use of an electric company car will have an overall BIK relief of €45,000 in 2025, comprising the current €35,000 electric vehicle specific relief, in addition to the temporary universal relief of €10,000. It was also announced that a BIK exemption for the provision of electric vehicle chargers at the home of directors and employees will be in place. The Government believes this will further incentivise the uptake of EVs in the company car sector. 

We also learnt that some 2.2 million motor insurance policyholders are set to benefit from the termination of the Motor Insurers Insolvency Compensation Fund levy. This comes into effect January 1st and should be reflected in your policy renewal quote.