NI hikes will only deepen challenges for rental and leasing sector, warns BVRLA

The vehicle rental and leasing industry faces a turbulent 2025, with escalating employer National Insurance contributions (NIC) at the forefront of mounting concerns, according to the BVRLA’s Industry Outlook Report.

The sector, while anticipating growth in consumer and business demand, is grappling with increased financial strain as NIC rises exacerbate an already challenging landscape.

BVRLA chief executive Gerry Keaney underscored the impact of the tax burden: “The staggering increase in employer NICs compounds the challenges our sector faces. Alongside regulatory uncertainty and decarbonisation pressures, this cost hike threatens to destabilise companies working tirelessly to meet ambitious transport goals.”

The NIC rise has direct implications for cash flow which is already fragile due to market volatility; for operational costs, including energy prices, impacting overall profitability and for employment with increased tax burdens deterring hiring, affecting the sector’s capacity to scale and innovate.

The Report highlights that alongside NIC concerns, residual value risks, supply constraints from the ZEV Mandate, and regulatory upheavals are looming threats. Yet, there is optimism about fleet demand and easing interest rates potentially offsetting some pressures.

Speaking at the Industry Outlook Conference, Future of Roads Minister Lilian Greenwood MP addressed these challenges, while the BVRLA reiterated its commitment to supporting members through initiatives like the #happyEVafter campaign and targeted training resources.

The association continues to advocate for government support to align fiscal policy with decarbonisation targets and operational sustainability. As Keaney noted, “For our sector to thrive, we need policies that support growth, not roadblocks like the NIC increase that threaten to stifle progress.”

The full Industry Outlook Report is now available, providing a comprehensive analysis of the sector’s priorities and challenges for 2025.