The latest UK Budget didn’t arrive with shock announcements for motorists. No fuel duty spike, no sudden bans, no dramatic overhaul of company car tax. But beneath the surface, the Government has quietly set the direction of travel for vehicle leasing over the rest of the decade.
If you lease a car, or manage vehicles for a business, these changes matter.
Electric Vehicles: Still Favoured, but Not Forever
Electric vehicles are gradually being brought into the mainstream tax system. From April 2025, EVs will no longer be exempt from Vehicle Excise Duty, meaning most will pay the standard annual road tax. The Government has softened the impact by increasing the “expensive car” threshold for EVs to £50,000, recognising that battery costs inflate list prices rather than luxury features.
For leasing customers, this isn’t a shock cost. Road tax is already built into monthly rentals, so the impact is marginal rather than painful.
The bigger shift comes later.
From April 2028, the Government plans to introduce a mileage-based charge for EVs and plug-in hybrids. Fully electric cars will pay a small per-mile rate, with hybrids paying less. The reason is simple: as fuel duty disappears, the Treasury needs another way to tax road use.
For anyone taking a typical two to four-year lease today, this charge sits beyond the end of the contract. For businesses planning long-term fleet strategies, it’s a reminder that mileage will matter more than ever.
Petrol and Diesel Get a Breather
For now, petrol and diesel drivers catch a short break. Fuel duty remains frozen into 2026, offering some stability for high-mileage users and businesses reliant on ICE vehicles. Beyond that point, duty is expected to rise gradually with inflation, making fossil fuel costs less predictable over time.
Why Leasing Looks Smarter Than Ever
What this Budget really highlights is complexity. Taxation now depends on fuel type, mileage, charging access, business use and contract length. That makes outright ownership riskier and long-term assumptions harder to get right.
Leasing cuts through that uncertainty. Fixed monthly costs, no residual value risk and the flexibility to reassess your options every few years are exactly what drivers and businesses need in a shifting policy landscape.
Electric vehicles remain highly attractive, particularly for company car drivers and businesses with home or workplace charging. The difference now is that the best choice depends on how you actually drive, not just what looks cheapest on paper.
The Bottom Line
Nothing in this Budget should put you off leasing your next vehicle. If anything, it reinforces why leasing makes sense. You stay flexible, you avoid long-term tax risk, and you can adapt as the rules evolve.
Choose the right car for how you drive today, and let leasing protect you from guessing what tomorrow’s policies might bring.