Ministers have raised concerns that government plans to raise Vehicle Excise Duty (VED) for HGVs this April will hit hauliers hard.
The planned increase, which was announced in the government’s Autumn Budget last year, will see VED for HGVs increased in line with the Retail Price Index (RPI) from 1 April this year.
VED rates apply to rigid trucks without trailers and tractive units, the cab of an articulated lorry, rigid goods vehicles with trailers, vehicles with exceptional loads, and haulage vehicles other than showman’s vehicles. Currently, for a 44 tonne truck, the annual VED is set at £1,643 for 2025/26.
This will be the first hike to the tax since 2014, when it was frozen, and will coincide with the annual rise in the HGV Levy rates, which are also set to go up on 1 April.
To add to the industry’s woes, hauliers are also facing staged rises in fuel duty from 1 September this year, which will see an extra 1p per litre added on 1 September, marking the reversal of the temporary 5p-per-litre cut that was introduced in 2022. On 1 December fuel duty will rise by 2p per litre and another 2p will be added on 1 March 2027. From April 2027, fuel duty will again rise in line with the Retail Prices Index (RPI).
In a recent meeting of MPs tasked with scrutinising the annual Finance Bill, which will enact measures outlined in the Autumn Budget, Shadow Exchequer Secretary James Wild raised concerns about the timing of the increases to these VED rates for HGVs and “the absence of meaningful backing for the most affected industries, especially the logistics sector, which keeps Britain moving.”
He said: “HGV vehicle excise duty is already complex, with more than 80 different rates, varying based on the characteristics of weight, emissions, class and configuration.
“The decision to uprate vehicle excise duty for HGVs and the levy comes at a tough time for the sector. Operators face a difficult time, with cost pressures from rising business rates, higher fuel duties and increased employment and transport taxes.”
He pointed to research from the RHA which estimates fuel duty adds more than £2,000 a year to the cost of operating a single HGV; which across the sector amounts to £435m in additional costs.
He continued:“The logistics industry pays a huge amount of fuel duty - it is a vital sector, which adds £170bn in gross value added and employs around 8% of the workforce, so this is a sector that the government should be supporting.
“The Minister said that all these measures are assessed at the time of the Budget; what assessment has he made of the impact of the increases contained in these clauses on the industry’s ability to invest, be efficient, grow and decarbonise?
“The sector has warned that the government risk stalling progress on decarbonisation, highlighting a lack of fiscal support for low-carbon fuels such as hydrotreated vegetable oil as essential transitional solutions such as battery and hydrogen technology step up.
“There is also no sign of extending full expensing to higher bands, which is something that the industry thinks is worth looking at. What assurances can the Minister give the logistics sector—one of our most important sectors—to provide it with the confidence it needs to invest?”
Liberal Democrat MP Joshua Reynolds agreed that the haulage sector has seen “significant challenges” in recent years. He added: “If we add that to the £2,000 cost per truck of the changes to vehicle excise duty, we see very clearly that the significant changes that the government are making in quick succession are not helping the sector, which needs all the support it can get.”
Dan Tomlinson MP, Treasury Exchequer Secretary, responded that the government is “providing stability” for the private sector following the “relatively chaotic approach” of the previous government.”
