Budget 2020: New emissions tax on new cars and used imports

Tax based on NOx emissions to replace diesel surcharge as carbon taxes inflate fuel prices

A new tax based on a vehicle’s nitrogen oxide (NOx) emissions will be applied to new car purchases and used imports from January 1st, replacing the current 1 per cent diesel surcharge.

The budget move comes alongside an increase on diesel and petrol prices from midnight on petrol and diesel prices due to an increase in carbon tax of €6 per tonne. It’s likely to add 2 cent to a litre of diesel and 1.7 cent on petrol. It’s the first step in the Government’s plan that will ultimately bring the charge from €20 per tonne of carbon to €80 in 2030.

By the time the repeated increases have hit, the price of a 60-litre fill of petrol will have risen €13.76, while diesel will be up €15.72, including VAT.

In terms of the new NOx tax, the first 60mg/km of NOx emissions from new cars is to be charged at a rate of €5 per mg. With average NOx emissions from new cars at 43mg/km, it means in many cases, and for the majority of new diesel models, the charge will barely be enough to directly replace the existing 1 per cent Vehicle Registration Tax on diesel engine cars.


Above 60mg/km of NOx, the charge increases to €15 per mg, and above 81mg/km it jumps to €25. The NOx charge will be capped at a maximum of €4,850 for diesel vehicles and €600 for other vehicles.

According to a spokesperson for the Department of Finance: “For a typical new diesel car with NOx emissions of 43mg/km, the surcharge element of the VRT charge will be €215. Likewise, for a new petrol with typical NOx of 23mg/km, the surcharge will be €115. Levels of NOx emissions tend to be much higher among older cars, particularly diesels, which were not subject to more stringent Euro standard thresholds.

“As such, for an older diesel with 80mg/km NOx, the surcharge added to the regular VRT will be €600. The impact will be less severe on petrol cars, as petrol engines are typically associated with less NOx. For an older petrol with, for example, NOx of 40mg/km, the surcharge will be €200.

“This NOx surcharge is based on the polluter-pays principle and will link the amount charged to the milligrams of NOx emitted. It is introduced in light of public health and environmental concerns. Pollutants such as nitrogen oxide, sulphur oxides and particulate matter impact air quality, particularly in high population density urban areas. The surcharge acknowledges the detrimental effect continued exposure to these emissions has on the air that we breathe and on the wider environment.”

Broadly similar

For the best-selling current new diesel models, the average charge under the new NOx tax will be broadly similar to the cost of the outgoing levy. For example, a Volkswagen Golf 1.6 TDI, with NOx emissions of 35mg/km will be charged €175 under the new tax. The outgoing diesel surcharge added about €174 to the price of the same car.

For new petrol and hybrid-engine models, it will represent a slight increase in price, as they had hitherto not been subject to the 1 per cent levy. The lowest-emitting cars, in terms of NOx, will obviously get off the lightest. A Toyota Corolla Hybrid, for example, has NOx emissions of just 3mg/km and so buyers next year will pay an extra €15 thanks to the NOx tax.

For other petrol engine cars the charge will be higher, but still small enough against the backdrop of overall increasing prices in the car market. A Hyundai Kona crossover, fitted with a 1.0-litre turbo petrol engine, will be charged a mere €80.

Of all cars that benefit most from these changes to the tax system, it’s those electric cars that do the best. These emit nothing at the point of use – no carbon dioxide, no NOx – so for now fully electric vehicles will continue to enjoy the lowest possible tax charges.

Minister for Finance Paschal Donohoe also announced an extra €3 million for the roll-out of on-street recharging points in 2020, including communal charging points for apartment blocks and at designated taxi ranks. He said the move would double the number of local authority on-street charging points installed.

In addition he allocated €8 million to maintain grants for those purchasing electric cars. He also extended the tax relief available on hybrid and plug-in hybrids for 2020. He also extended the tax relief available on hybrid and plug-in hybrids for 2020, and the Benefit-in-Kind zero tax rate on electric vehicles to 2022.

Used imports hit

Using the NOx tax as a deterrent to those seeking to import a used diesel car from the UK could well prove effective.

For example, a 2013 Volkswagen Golf 1.6 TDI (and the Golf is currently the most popular imported car) has NOx emissions of 118mg/km. That would incur a NOx tax charge of €1,510. Given that a 2013 Golf would currently be charged only €1,500 or so in terms of VRT when it’s imported, that may well prove a significant barrier to second-hand car shopping in the UK.

With other models, though, the impact will be minimal. For example, a BMW 520d executive saloon from 2015 (again, a hugely popular car among those importing from the UK) has rated NOx emissions of just 17mg/km, so would only be charged €85 in NOx tax. Equally, an Audi A6 2.0 TDI diesel saloon, also from 2015, has NOx emissions of 55mg/km, so while it will be a little more expensive, the total charge will amount to just €275.

For those seeking to find out what the NOx emissions are on a particular vehicles, things are a little complex. The only figure that really matters is the one on the certificate of conformity for the car you’re buying. That’s its birth cert, and that’s the final word on that car’s NOx emissions.

However, there are two websites that could prove useful in the coming weeks, as you work out which new car to buy (or which old car to import): the UK's Vehicle Certification Agency and Emissionsfinder. com">emissionsfinder.com. These sites offer the most reliable figures for nitrogen oxide emissions, albeit both websites have their issues.

The official Vehicle Certification Agency website's numbers are likely to be accepted here by officials, but the website is awkward to use and is often missing data for major models (usually while that data is being updated).

Emissionsfinder.com is much easier and quicker to use, but its numbers won’t necessarily stack up when it comes to convincing Revenue how much NOx tax you’ll have to pay when it comes to importing a car. Use it as a guide rather than gospel.


Overall, Budget 2020 was cautiously welcomed by the motor trade. Brian Cooke, director general of Society of the Irish Motor Industry (SIMI), said the replacement of the diesel surcharge with an NOx tax was sensible and would benefit cleaner new cars and newer used imports.

He also welcomed the decision to delay any changes to the current VRT regime, given the context of Brexit uncertainty. However, it’s likely that the next budget will have to address changes to the emissions testing regime, known as the WLTP tests.

AA Ireland warned the increase in carbon tax announced would do very little to reduce Ireland's over-reliance on the private car, criticising the move as little more than "a Government cash grab dressed up as a green initiative".

"Increasing the price today and in future years through increases to carbon tax will only achieve one thing, which is to generate additional revenue for government without having any impact on our overreliance on the private car," said company spokesman Conor Faughnan. "Government have cynically taken advantage of the climate crisis to justify a tax increase, instead of outlining measures which would actually lead to reductions in our carbon emissions."

However, he welcomed the plans to replace the diesel surcharge introduced last year with a NOx-emissions based charge – a move the organisation claims could actually have a significant benefit in reducing Ireland’s carbon emissions.

“The move to NOx-emissions based charging will help to close the gap in terms of the cost of a new car versus a second-hand UK import, which is one of the main issues facing efforts to make Irish transport cleaner. The relatively poor performance of sterling in recent years made UK imports an enticing option for many, but unfortunately the cars being sold into the Irish market by the UK tended to be old vehicles with high CO2 emissions,” Faughnan said.

Michael McAleer

Michael McAleer

Michael McAleer is Motoring Editor, Innovation Editor and an Assistant Business Editor at The Irish Times

Neil Briscoe

Neil Briscoe

Neil Briscoe, a contributor to The Irish Times, specialises in motoring