Thousands of drivers could be impacted by new car tax changes announced by HMRC that may see them have their Vehicle Excise Duty costs slashed.
HM Revenue and Customs has announced that it will provide a 12-month “holiday” from Vehicle Excise Duty for the majority of heavy goods vehicles.
It will impact HGVs over 3,500kg, in tax classes: standard HGV, trailer HGV, special types, combined transport, and island goods vehicles.
The new car tax rules will apply for those renewing their VED between July 1, 2026 and June 30, 2027.
Eligible vehicles renewing their VED between these dates will pay a reduced annual rate of just £1.
The measures were first announced by Chancellor Rachel Reeves last month, “in recognition of the key role the road haulage sector plays in transporting goods across the UK”.
Labour acknowledged that hauliers had faced a disproportionate exposure to fuel costs amid the conflict in Iran.
The Chancellor outlined that the typical heavy lorry would save £600, while the biggest vehicles on the road would save a staggering £912.
HMRC has announced that HGV drivers will receive a Vehicle Excise Duty ‘holiday’
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PA/GETTYShe said: “I’m keeping taxes down for drivers and businesses – putting money in the pockets of millions of workers and cutting costs for farmers and hauliers.
“The war in Iran is pushing up fuel prices here at home, but after strong growth at the beginning of the year, I am stepping in to protect people at the pump
“By protecting households and businesses, we are building a stronger and more secure economy for Britain. That is the right economic plan.”
The measures are not expected to have any significant macroeconomic impacts, nor will it have an impact on individuals, households and families.
An estimated 46,000 enterprises are set to benefit from the new tax rules
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GETTYIt is expected to have a positive impact on around 46,000 UK enterprises whose main business is road freight, as well as those that operate HGVs as part of their wider business.
HMRC added: “One-off costs will include familiarising themselves with the change, which is expected to be negligible.
“There are not expected to be any continuing costs. Customer experience is expected to remain broadly the same as this measure does not significantly change existing processes.”
Prime Minister Keir Starmer praised hauliers for working through the cost of living crisis and the impacts of the war in Iran.
Labour could hike the rate of fuel duty in line with inflation next year | PA
Alongside the VED “holiday”, Labour confirmed that the 5p cut on fuel duty will be extended for the rest of the year.
It was previously set to expire in September and be phased out by 1p that month, 2p in December and 2p in March 2027.
Sir Starmer said: “I know many are feeling the pressure of energy and fuel costs, and are worried about how the conflict in Iran will affect their finances. Because when global events drive up prices, it’s working people who feel it first.
“That’s why this Government is stepping in to keep fuel costs down for millions of drivers and putting money back in the pockets of working people.”