UK Road Tax Cut for Heavy Goods Vehicles Takes Effect

A one-year reduction in Vehicle Excise Duty for heavy goods vehicles began on 1 July, setting the annual charge at £1 for qualifying lorries. The change applies to most vehicles over 3,500 kg that renew their tax during the next 12 months. Eligible categories include standard HGVs, trailer HGVs, special types, combined transport vehicles and island goods vehicles.

The reduction follows an announcement made in May as part of a support package tied to higher fuel costs. It was approved through the Taxation (Energy and Vehicles) Bill. The Treasury stated the cut recognises the role of road haulage in moving goods while assisting operators facing increased expenses.

Reeves also confirmed a reduction of more than one-third in red diesel duty until the end of 2026. Tax-free mileage rates for employees using their own vehicles rose by 10p per mile to 55p, effective from April 2026. The DVLA updated its systems to apply the reduced rates automatically.

Operators may also request six-month licences without the usual £50 minimum payment. Around 46,000 road freight businesses are expected to benefit, along with other companies that operate qualifying HGVs. Officials described the measure as short-term financial support rather than an incentive to change vehicle purchases.

Richard Smith, MD of the Road Haulage Association, said the 12-month reduction would offer some relief but warned of limited overall impact for many operators. He urged future decoupling of fuel duty from RPI. The scheme will be monitored by the DVLA, HMRC and the Treasury for its duration.