Tens of thousands of haulage firms will see their vehicle tax bills slashed to just £1 in a move aimed at keeping transport costs down, the government announced today (1 June).
A 12-month Vehicle Excise Duty (VED) holiday will come into force today, meaning renewing the annual road tax for the majority of HGVs this year will cost no more than £1.
The reduced £1 VED rate applies to the majority of HGVs renewing vehicle tax between 1 July 2026 and 30 June 2027.
The tax cut will save typical HGVs around £600, with some vehicles saving up to £912, nor is any additional paperwork required to qualify for the tax reduction.
Exchequer Secretary to the Treasury Dan Tomlinson said: “We know the haulage sector is facing rising costs and there is no single answer to those pressures.
“But cutting road tax to just £1 for most HGVs will help keep costs down, saving some hauliers over £900 for each eligible vehicle.”
“There’s no extra paperwork, no forms and no bureaucracy – just straightforward support for the haulage firms who keep Britain moving.”
The move follows concerted lobbying from the RHA and Logistics UK, which highlighted how hauliers are disproportionately exposed to rising diesel costs, as evidenced when the war in Iran started earlier this year.
In 2024, there were around 12,000 miles driven on UK roads for every van and 7,500 miles for every car, compared to 32,000 miles for every HGV.
Today’s announcement comes as part of a wider package of support for drivers and businesses announced by the Chancellor in May.
Alongside the road tax cut, the government has extended the 5p fuel duty cut and frozen fuel duty, with decisions taken since the July 2024 expected to save the average HGV more than £2,000 in fuel costs compared with previous plans.
Tax classes eligible for the tax holiday:
- Standard HGV (Tax Class 1): This includes rigid and articulated goods vehicles constructed and used for the conveyance of goods or burden for hire and reward or in connection with a trade; business or profession and which exceeds 3,500kg revenue weight.
- Trailer HGV (Tax Class 2): This includes rigid Heavy Goods Vehicles over the weight of 12,000kg, that pulls a trailer exceeding 4,000kg and is required to pay an additional trailer supplement.
- Special Types (Tax Class 57): This includes a Heavy Goods Vehicle, or a Heavy Haulage Tractor used to draw trailers carrying exceptional loads subject to a Special Types General Order (STGO) or a Special Order.
- Combined Transport (Tax Class 23): Vehicles used in intermodal freight operations, where goods are transported partly by road and partly by rail, inland waterway, or sea.
- Small Islands Vehicles (Tax Class 16): Goods vehicles weighing over 3,500kgs that are based and operating from certain small islands.
