Finance Bill 2025: Vehicle Taxation
Finance Bill 2025: Vehicle Taxation
The Finance Bill 2025 introduces several updates to vehicle taxation, reflecting the Government’s continued focus on reducing transport-related emissions and supporting the transition to electric vehicles. The measures balance environmental objectives with practical supports for employers and individuals, offering greater certainty for fleet planning and long-term investment.
Vehicle Benefit in Kind (BIK) – Original Market Value
The temporary universal relief applied to the Original Market Value of cars in categories A-D and vans is being extended on a tapered basis for three further years of assessment, to end on 31 December 2028. The relief will remain at €10,000 for the 2026 year of assessment, reducing to €5,000 for 2027 and €2,500 for 2028. Tapering out the temporary relief will allow for continued support for employees, while incentivising the move to lower-emission employer-provided cars in the medium term. The lower limit in the highest mileage band is being permanently reduced from 52,001km to 48,001km from 1 January 2026.
Vehicle BIK - New Vehicle Category for Electric Vehicles
The tables used to calculate BIK liability on employer-provided cars are being amended to incorporate a new category for zero-emission cars commencing on 1 January 2026.
The new A1 vehicle category will apply significantly reduced BIK rates for electric vehicles, ranging from 6% to 15 %, depending on business mileage.
This change gives policy certainty to employers when it comes to planning long-term fleet investments and emphasises the Government's commitment to decarbonisation efforts.
Vehicle Registration Tax (VRT) - Extension of €5,000 Relief for Electric Vehicles
The VRT relief for electric vehicles (EVs) is being extended by one year to 31 December 2026. EVs with an Open Market Selling Price (OMSP) of up to €40,000 will continue to be granted VRT relief of up to €5,000, and EVs with an OMSP of greater than €40,000 but less than €50,000 will receive a reduced level of relief.
The transition to an electrified national fleet is central to the Government's climate action policy, and the VRT relief is part of a wider suite of very generous measures to support the uptake of EVs.