Chancellor Rachel Reeves has introduced a new car tax fee of just £1 for HGV operators, affecting as many as 680,000 drivers in the UK. The measure, which came into effect this week, provides a 12-month Vehicle Excise Duty (VED) holiday for hauliers renewing between July 1, 2026 and June 30, 2027.
Details of the £1 Car Tax Fee
The Road Haulage Association (RHA) confirmed the update, stating: “From 1 July, eligible HGV operators renewing vehicle tax will pay £1 in VED under the Government’s new 12-month payment holiday. The relief applies automatically to eligible vehicles taxed or re-taxed between 1 July 2026 and 30 June 2027. The HGV Levy remains payable where applicable, and Direct Debit will not be available for vehicles receiving the reduced rate.”
According to RHA data, there are approximately 58,262 road freight enterprises in the UK and around 684,000 HGV drivers. The discount aims to support the sector, which has been disproportionately impacted by rising fuel costs amid the conflict in Iran.
Impact on Hauliers and Savings
HMRC explained that the targeted measure was introduced in recognition of the key role the road haulage sector plays in transporting goods across the UK. The British Vehicle Rental and Leasing Association (BVRLA) noted that the measure applies to various vehicle tax classes, including HGVs (TC01), HGV trailers (TC02), small islands vehicles (TC16), combined transport vehicles (TC23), and special types vehicles (TC57).
The Government estimates that the policy will save a typical heavy lorry around £600 per year, with the largest vehicles saving up to £912 annually. HMRC stated that the discount reduces costs for UK hauliers and will have “no disproportionate impact on individuals.”
Chancellor's Statement
Rachel Reeves commented: “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.”
The £1 car tax fee is part of broader efforts to mitigate financial pressures on the haulage industry, which has faced significant challenges due to global events and rising operational costs.
