Temporary Vehicle Excise Duty rates for heavy goods vehicles
Published 17 June 2026
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This publication is available at https://www.gov.uk/government/publications/12-month-vehicle-excise-duty-ved-holiday-for-heavy-goods-vehicles-hgvs/temporary-vehicle-excise-duty-rates-for-heavy-goods-vehicles
Who is likely to be affected
Those who pay vehicle excise duty (VED) on heavy goods vehicles (HGVs) over 3,500kg, in tax classes: standard HGV (tax class 1); trailer HGV (tax class 2); special types (tax class 57); combined transport (tax class 23); and island goods vehicles (tax class 16).
General description of the measure
The measure will provide a 12-month holiday from VED, also known as road tax, to the majority of HGVs renewing their VED between 1 July 2026 and 30 June 2027. Eligible vehicles renewing their VED between these dates will pay a reduced annual rate of £1.
Policy objective
This targeted measure is part of the package announced by the Government in May 2026, in recognition of the key role the road haulage sector plays in transporting goods across the UK and their disproportionate exposure to fuel costs amid the conflict in Iran.
Background to the measure
The measure was announced by the Prime Minister, and the Exchequer Secretary to the Treasury, on 20 May 2026.
Detailed proposal
Operative date
The measure will have effect from 1 July 2026 until 30 June 2027.
Current law
Schedule 1, Part VIII to Vehicle Excise and Registration Act 1994 (VERA) sets out the current rates for goods vehicles exceeding 3,500kgs revenue weight.
Section 3 of VERA sets out the duration of vehicle licences that may be issued.
The Vehicle Licences (Duration of First Licences and Rate Duty) Order 1986 makes provision for the first licences for vehicles to run from specific dates during a month.
Proposed revisions
The measure will treat as amended Schedule 1, Part VIII, paragraphs 9, 10, and 11 of VERA to reduce the VED liability for the HGVs exceeding 3,500kg in revenue weight and in the eligible tax classes, during the period beginning with 1 July 2026 and ending with 30 June 2027.
The measure will treat as amended section 3(2) of VERA to allow for a six-month licence to be issued below £50 to those vehicles eligible for the temporary VED rate.
The measure will also treat as amended Article 3(1)(b) of the Vehicle Licences (Duration of First Licences and Rate of Duty) Order 1986 in relation to vehicle licences taken out for vehicles in the eligible tax classes during the period beginning with 1 July 2026 and ending with 30 June 2027.
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
The costing for this measure will be subject to scrutiny by the Office for Budget Responsibility and will be set out at a future fiscal event.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure has no disproportionate impact on individuals as it reduces costs for registered keepers of HGVs. The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure reduces costs for UK hauliers. As such, no impact on the equality of groups sharing protected characteristics has been identified.
Administrative impact on business including civil society organisations
This measure is expected to have a positive impact on around 46,000 UK based enterprises whose main business is road freight, plus enterprises that operate HGVs as part of their wider business, by reducing their VED liability for each eligible vehicle to £1 for 12 months when renewed during the period beginning with 1 July 2026 and ending with 30 June 2027. 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.
There is expected to be no impact on civil society organisations.
Operational impact (£ million) (HMRC or other)
The costs are expected to be minimal. There will be a marginal cost to the Driver and Vehicle Licencing Agency (DVLA) in changing the system to manage the HGV VED reduction period.
Other impacts
This is a temporary measure and is not expected to impact air quality or climate change as it should not influence the decisions around which vehicles are purchased.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review by DVLA, HMRC and HM Treasury through communication with key stakeholders.
Further advice
If you have any questions about this change, please contact HM Treasury.
Declaration
Daniel Tomlinson MP, Exchequer Secretary to the Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.