Northern Ireland is facing the prospect of new car shortages and higher motoring taxes as post-Brexit provisions under the Windsor Framework come into force at the start of 2026, triggering concern across the automotive sector.
From January 1, all new cars sold and registered in Northern Ireland will have to comply with European Union vehicle standards rather than those applied in Great Britain. Dealers warn that many British-specification models currently sold in Northern Ireland will no longer be eligible, creating the risk of significant gaps in showroom availability and, in some cases, the complete withdrawal of certain models.
EU vehicle rules typically require additional safety features, such as mandatory speed-limit alerts and steering-wheel lane-assist systems, which are not standard across all UK-market cars. Manufacturers have been slow to adapt British models to meet EU requirements, leaving Northern Irish dealers exposed just weeks before the rules take effect.
The changes will also affect company car drivers. Benefit-in-kind tax for vehicles registered in Northern Ireland will be calculated under EU rules, meaning plug-in hybrid company cars will attract higher tax bills than identical vehicles registered elsewhere in the UK. Industry figures say this divergence risks distorting fleet purchasing decisions and making Northern Ireland a less attractive base for employers.
The situation is further complicated by the widening gap between the UK and EU on the transition away from petrol and diesel cars. The UK plans to ban new petrol and diesel sales from 2030, while the EU’s ban was originally set for 2035. That deadline now looks likely to be pushed back to 2040, potentially creating further divergence in vehicle availability and compliance.
The Windsor Framework, agreed to avoid a hard border on the island of Ireland, keeps Northern Ireland aligned with the EU single market for goods. While this was designed to protect the Good Friday Agreement, it has had an especially sharp impact on car dealerships, which have historically sold the same British-specification vehicles available across England, Scotland and Wales.
Senior figures in the automotive industry have held multiple meetings with the Northern Ireland secretary, Hilary Benn, pressing for an indefinite delay to the implementation of EU vehicle standards and for benefit-in-kind tax to be harmonised with the rest of the UK. While ministers are said to be sympathetic, officials have indicated that any changes would need to form part of a broader reset in UK-EU economic relations.
Whitehall sources insist the government remains committed to “full and faithful implementation of the Windsor Framework”, arguing that it safeguards Northern Ireland’s unique position and ensures the smooth flow of trade.
The stakes are high. The automotive sector employs around 17,600 people in Northern Ireland and accounts for roughly 50,000 new vehicle registrations each year, about 2.5 per cent of the UK market. Dealers say sourcing vehicles from the Republic of Ireland is not a viable alternative, as prices are typically higher due to vehicle registration tax and a 23 per cent VAT rate, compared with 20 per cent in the UK.
Despite the framework’s aim of preserving the EU internal market, there is little cross-border trade in new cars. Just 134 vehicles were imported into the Republic of Ireland in the ten months to October 2025, including only six from the UK, highlighting the practical limitations of relying on Irish supply.
Dealers are already feeling the effects. Manufacturers have restricted access to unsold UK stock pipelines, and while new car sales across the UK are up five per cent so far this year, registrations in Northern Ireland are down three per cent.
A government spokesperson said ministers were working to ensure manufacturers face “no barriers to obtaining dual-vehicle approvals”, adding that the aim was to prevent drivers and dealers in Northern Ireland from seeing their choice restricted. However, with the deadline fast approaching, industry leaders warn that without swift action, shortages and higher costs are inevitable.
