2020 brings a big new charge for buyers of some popular cars

2020 brings a big new charge for buyers of some popular cars

There were 125,557 new cars registered in Ireland in 2018, a fall from 131,332 in 2017, and well shy of the recent peak of 146,647 for 2016.

The figures for 2019 revealed a much lower figure, of 117,100 new cars registered.

By any measure, such a dramatic fall-off in new car registrations should be a warning sign of a floundering economy and an evaporation of consumer confidence.

But look beyond the decrease in new car sales, to the number of imported cars registered in Ireland, and a completely different picture emerges.

Second hand imported cars registered in Ireland in 2019 rocketed to over 100,000 units, setting a new record.

Discerning Irish buyers in their droves cashed in on the relatively low prices, thanks to a weak sterling currency, by buying relatively cheaper imports, rather than buy new cars domestically.

But the strong flow of UK imports, and subdued Irish new sales, may well be left behind us now, with the Finance Act 2019 replacing the 1% diesel surcharge that was introduced last year with a nitrogen oxide (NOx) emissions-based charge.

It applies to all new and second-hand passenger cars registered for the first time in the State from January 1, 2020. As the charge applied is not discounted relative to the age of the car, the imposition of the charge has a proportionately higher impact on the purchase price, in percentage terms.

The NOx charge will be a component of vehicle registration tax; the existing carbon dioxide charge plus the NOx charge are added to give the total VRT payable

The NOx charge will be based on mg per kilometre of nitrogen oxide emissions.

For the first 0-60 mg/km, the amount payable is €5.

For the next 20 mg/km or part thereof up to 80 mg/km, the amount payable is €15.

For the remainder, above 80 mg/km, the amount payable is €25.

The NOx charge will be capped at a maximum of €4,850 for diesel vehicles, and €600 for other vehicles.

The NOx amount will be chargeable on all Category A vehicles registered after December 31, 2019.

Customers registering a vehicle after this date will have to provide evidence of the vehicle’s NOx emissions, in order to finalise registration.

2020 brings a big new charge for buyers of some popular cars

Failure to provide this information may lead to delays, or a flat charge being imposed (see the www.revenue.ie website section on Calculating the Nitrogen Oxide Charge).

There are a number of sources where the emissions figure may be obtained.

The charge is applicable to all Category A vehicles, excluding electrics, but including petrol, diesel, and hybrids.

Category A vehicles include passenger vehicles, SUVs and jeeps.

Importantly, the changes will not affect Category B vehicles, which include car-derived vans and jeep-derived vans.

Similarly, it is expected that many crew cab type vehicles which are assigned a BE bodywork code, where the vehicle does not exceed 3,500 kilograms, and where the seating positions and the cargo area of the vehicle are not located in a single compartment, will also be excluded from Category A for the purposes of the new NOx charge.

Figures from the Revenue suggest some popular models face NOx charges of between €1,825 and €4,850, depending on the model.

In general, while the change to the VRT regime to include a charge for NOx pollutants might well be warranted from a climate mitigation perspective, the cynic in me suspects the move is as much about raising revenue from a new, additional tax on imports, but perhaps more substantially by diverting a cohort of would-be car purchasers back to buying new cars domestically, where the exchequer gains three times on the sale, from VAT, VRT, and the new NOx charge.

Ironically, discouraging the purchase and indeed the retention of second-hand cars (imports) will perhaps be damaging to the global environment in the longer run, due to the carbon emissions in manufacture of new cars.

Perhaps it’s a case of thinking locally and not acting globally.

Each individual person should obtain professional advice relative to their own circumstances.

Chartered tax adviser Kieran Coughlan, Belgooly, Co Cork. (http://www.coughlanaccounting.com)

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