Measures to further the transition to an ever “greener” economy were also announced. While not a tax related measure, perhaps the most welcome announcement on the climate front is the establishment of the Infrastructure, Climate and Nature Fund. The fund is a response, in the words of the Minister, to “the devastating impact of climate change on communities across the globe”.
Microgeneration of electricity
Microgeneration of electricity is the small-scale production of electricity by consumers in their own homes. Where excess electricity is produced, this can be sold back to the grid. There is a tax exemption from income tax, USC and PRSI where this energy is produced from renewable, sustainable or alternative sources of energy. The Minister announced an increase in this exemption from €200 to €400.
Relief for battery electric vehicles
The relief from benefit-in-kind on electric vehicles (EVs) was subject to a tapering of relief in recent Finance Acts. The Minister announced a deferral of this tapering until 2026 with the deduction of €35,000 applying until the end of 2025, €20,000 in 2026 and €10,000 in 2027. In our Pre-Budget 2024 Submission, we called on the Government to introduce measures to stimulate the uptake of EVs by Irish consumers.
The VRT relief for battery EVs is being extended for a further two years to the end of 2025. This applies to EVs valued up to €50,000.
Carbon tax
As expected, carbon tax is set to increase again, in line with commitments to raise the rate of carbon tax to €100 per tonne of carbon dioxide emitted by 2030, as per the trajectory set out in Finance Act 2020. From 11 October 2023, the rate per tonne of carbon dioxide emitted for auto diesel and petrol will increase from €48.50 to €56.00. This increase will apply to all other fuels from 1 May 2024.
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