The 2022 Budget presented on October 12th contained a number of elements that will impact the automotive industry in 2022 and subsequent years.
This budget has surprised the automotive industry, and many are disappointed with the electric vehicle BIK tapering. The new budget brought mixed feelings to motorists as fuel prices are to rise yet again.
Electric Vehicle BIK System
Currently there is a zero rate of BIK on electric vehicles where the OMV is €50,000 or less.
If the OMV is higher than €50,000, then BIK is calculated by reducing the OMV by €50,000 then calculating the cash equivalent for the vehicle. There was an extension of the BIK exemption for EV’s which has been active since 2019 and has continued throughout 2022. The BIK exemption on EV’s will now be extended out to 2025. However, for BIK purposes, the original market value of an EV is to reduce by €35,000 for 2023, €20,000 for 2024 and €10,000 for 2025.
Vehicle Registration Tax Changes
There will be changes to VRT that will take place from the January 1st 2022. A revised 20-band table with an uplift in rates beginning with a 1% increase for vehicles that fall between bands 9-12, 2% for bands 13-15, and then a 4% increase for bands 16-20. The vehicles receiving a 1% increase will typically see a €500 increase to their RRP, vehicles receiving a 2% VRT increase will see a €600 to €1600 increase to RRP and vehicles in the higher bands receiving a 4% increase will see a €2500+ increase to their RRP. This is just from a small analysis of current vehicles and only an estimate as manufacturers could adjust their pricing structure before 2022.
Meanwhile the €5,000 VRT relief for EV’s has been extended until the end of 2023.
There was an announcement resulting in the rise in all fuel prices overnight. A litre of diesel has risen by 2.5 cents per litre or €1.48 on average for every full tank. Petrol has gone up in price by 2.1 cents or €1.28 per full tank.
In conclusion the 2022 Budget has resulted in a variety of changes for the motor industry and the motorist. The 0% Benefit-In-Kind has proved to be a real success in encouraging EV sales, and while its extension is positive, the tapering of this relief is too early and contradicts the Governments Climate Action Plan to have 180,000 electric vehicles on the road by 2025.
All of these measures are subject to further clarification in the Finance Bill update.