In a significant move to ease the financial burden on drivers and businesses, Rachel Reeves has announced a temporary reduction of Vehicle Excise Duty (VED) for heavy goods vehicles (HGVs) to just £1. This 12-month “holiday” applies to HGVs over 3,500kg and covers several tax classes, including standard HGVs, trailer HGVs, special types, combined transport, and island goods vehicles.
The new reduced rate is set to take effect for vehicles renewing their VED between July 1, 2026, and June 30, 2027. However, it’s important to note that vehicles taxed before July 1, 2026, will not be eligible for refunds and will continue to pay the current rates.
Labour Party Chancellor Rachel Reeves stated, “I’m keeping taxes down for drivers and businesses—putting money back into the pockets of millions of workers and cutting costs for farmers and hauliers. Despite challenges like rising fuel prices driven by conflicts such as the war in Iran, we are stepping in to protect people at the pump.”
READ MORE: Billionaire Trader Alex Gerko Slams HMRC for ‘Gloating’ After Supreme Court Tax Ruling
READ MORE: DWP Confirms Major Timms Review Update for PIP Claimants Scheduled for July
The reduction could save the average heavy lorry driver around £600, with the largest vehicles potentially saving up to £912 over the year.
The British Vehicle Rental and Leasing Association (BVRLA) clarified the details: “The temporary £1 vehicle tax rate applies to vehicles taxed between July 1, 2026, and June 30, 2027. No refunds will be issued for earlier payments. The measure covers tax classes TC01, TC02, TC16, TC23, and TC57. However, the HGV levy remains unchanged for applicable vehicles.”
Further information and official guidance will soon be available on GOV.UK, with updated forms and detailed support for HGV operators expected to follow.
This initiative aims to provide vital financial support to HGV operators and their customers during a time of economic uncertainty, helping to sustain Britain’s transport and logistics sectors.