The latest UK Budget introduces several changes that directly affect van-hire businesses, fleet operators, public-sector hire users and companies hiring vans on a short or long-term basis. At Pace Van Hire, we believe clarity and foresight are essential. This article explains what’s changed, why it matters, and what action we recommend, with insights ready for our customers and partners.
1. New Electric Vehicle (EV) Per-Mile Road Tax: What It Means for Fleets and Hire Clients
The government has introduced a new tax regime for electric (and plug-in hybrid) vehicles, known as eVED (electric Vehicle Excise Duty). From April 2028:
- Battery-electric vehicles will pay 3 pence per mile.
- Plug-in hybrids (PHEVs) will pay 1.5 pence per mile.
Importantly, this will be in addition to any existing annual Vehicle Excise Duty (VED).
What’s the impact for van-hire and fleet customers?
- Electric vans (or cars) used heavily (e.g. for frequent rentals, delivery runs, or long-distance hire) will become more expensive to operate.
- For low-mileage, local use (short hires, occasional jobs, local deliveries), the extra cost may be modest, but over time it adds up.
- Traditional diesel/petrol vans may remain more economically attractive for high-mileage or heavy-use operations.
At Pace, we’ve long supported the transition to cleaner vehicle fleets. But with the new per-mile levy, it’s more important than ever for businesses to run real-world usage analysis, to know where electric vans deliver value, and where diesel remains the smarter choice.
Recommended actions:
If you currently operate or plan to rent EV vans – ask for a cost-per-mile comparison (including this levy, energy/fuel, maintenance, and expected mileage).For high-mileage operations (e.g. long-distance delivery, frequent rentals) carefully consider whether electric is the right choice, or whether diesel / traditional vans remain more efficient.For short-term rentals, occasional use, local work – EV vans may still offer savings and environmental benefits.At Pace Van Hire, we’re fully aware of the growing demand for cleaner, low-emission transport options and the direction the industry is moving in. Our long-term plan is to integrate electric vehicles into our fleet in a way that’s practical, reliable and genuinely useful for our customers.
We are continuing to open talks with key decision makers whose fleet of vehicles we supply. Time and time again we are seeing Electric vehicles overlooked when really, they can be a very useful asset. With the help of our telematics data we can help guide fleet owners’ decisions to pinpoint exactly where electric vehicles work and don’t work in their fleet of vehicles, ultimately saving time and money.
Our commitment is to transition responsibly adopting electric vans where they add real value for customers, while continuing to offer the flexibility, reliability and service Pace Van Hire is known for.
2. Fuel Duty Freeze: A Lifeline for Diesel/Petrol Vans
The Budget confirmed that the existing freeze on fuel duty will continue, meaning that petrol and diesel prices will not see an immediate increase because of duty rise.
The impact?
- Operating costs for diesel/petrol vans remain more predictable and stable, a big plus for businesses relying on fuel-based vehicles, especially for long-distance or heavy-use hire.
- For many hire companies and customers, this means less pressure to switch to EVs purely for cost reasons.
For many UK businesses, diesel remains the backbone of commercial transport. The fuel duty freeze gives our customers breathing room, predictable operating costs that make planning and pricing easier.
Recommended actions:
If your operations involve long-distance travel, heavy load, or frequent van use, continuing with diesel/petrol vehicles may remain the most cost-effective option.Use this period of stability to evaluate your true mileage and usage patterns, and decide on fleet mix accordingly.3. Continued Incentives for EVs and Infrastructure Investment
The Budget not only introduced levies, it also maintained and expanded incentives for EV adoption and charging infrastructure:
- The government extended support for EV infrastructure and charging.
- Reliefs such as the “first-year allowance” for zero-emission vehicles and EV charging infrastructure remain in place.
- The long-term policy framework still supports fleet modernisation and a gradual transition where viable.
We believe electric vans have a key role in the future, especially for urban or low mileage. The tax incentives and infrastructure support make them more accessible, but businesses need a clear-headed plan, not just optimism.
Recommended actions:
If you’re planning to modernise or expand your fleet, consider a mixed strategy: EVs for city-based or lower-mileage use, diesel/petrol vans for heavier or long-distance work.If you can, invest in charging infrastructure early (especially if you run a central depot or have recurring local jobs), this helps protect against rising energy/fuel prices and simplifies future fleet transitions.4. Rising Labour Costs and Broader Operational Pressures
Though not directly related to vehicles, the Budget includes measures that will affect underlying costs for businesses including hire firms:
- The National Living Wage will increase to £12.71/hour for workers aged 21 and over from April 2026.
- That means all roles – drivers, cleaners, maintenance, admin, may see higher wage bills.
Labour costs are rising across the board. For fleet and hire businesses already managing tight margins, this reinforces the value of flexible, on-demand hire instead of long-term fixed overheads.
Recommended actions:
Reassess staffing levels, shift patterns and utilisation to accommodate higher wage costs.Use van hire flexibility to avoid over-staffing or over-investment in vehicles during quiet periods.Explore efficiencies in maintenance scheduling, routing, and utilisation to offset higher labour and running costs.5. What This Means for Different Types of Hire Customers
Whether you’re a fleet manager, a business hiring vans short-term, a public-sector operator, or an individual needing a hire van, here’s what to keep in mind:
- Short-term/occasional hires (e.g. removals, one-off jobs, occasional transport): EV vans can still represent a savvy, environmentally-friendly choice, especially if mileage is modest.
- Medium-term hires or businesses with local/urban operations: Mixing EV and diesel vans (depending on route, frequency, and load) may give the best balance of cost, flexibility, and sustainability.
- Long-term contracts, high mileage, heavy use or long-distance travel: Diesel/petrol vans are likely to remain the most economically efficient, until further incentive changes or EV infrastructure improves significantly.
How We Can Help You Stay Prepared and In Control
Budget 2025 brings clear changes. The introduction of a per-mile charge for EVs, combined with a fuel-duty freeze and ongoing EV incentives, shifts the balance, and puts a premium on intelligent fleet planning.
We believe that flexible hire remains one of the most powerful tools for businesses and organisations trying to run efficient, cost-effective, and future-proof fleets. At Pace Van Hire, we’re committed to supporting you through these changes with honest, expert advice.
These Budget changes may feel complex, but businesses that plan proactively will come out ahead. We’re here to help you model the best fleet strategy, balancing cost, flexibility and sustainability.
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