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Most heavy goods vehicles (HGVs) can now benefit from a temporary £1 Vehicle Excise Duty (VED) rate for 12 months, following a Government measure introduced on 1 July 2026.
The temporary reduction is intended to provide financial support to the road haulage sector, with eligible operators paying just £1 in VED when their vehicle is taxed or renewed during the qualifying period.
What has changed?
From 1 July 2026 until 30 June 2027, most eligible HGVs over 3,500kg will qualify for a temporary reduced VED rate of £1 for 12 months.
The measure was introduced against the backdrop of increased costs facing the road haulage sector and recognises the sector’s important role in transporting goods across the UK.
The Government estimates that the measure will benefit around 46,000 UK-based enterprises whose main business is road freight, as well as businesses that operate HGVs as part of their wider activities.
Which vehicles are eligible?
The temporary £1 rate applies to HGVs over 3,500kg in the following tax classes:
- Tax class 1: HGV
- Tax class 2: Trailer HGV
- Tax class 57: Special Types
- Tax class 23: Combined Transport
- Tax class 16: Island
Operators can check their vehicle’s tax class on the vehicle’s V5C registration certificate.
The measure applies to the majority of HGVs in these classes, meaning operators should check the tax class of individual vehicles rather than assuming that every heavy goods vehicle qualifies.
When does the £1 rate apply?
The temporary rate applies where an eligible vehicle is taxed between 1 July 2026 and 30 June 2027.
Importantly, the reduction is linked to when the vehicle is taxed or renewed, rather than being applied retrospectively.
For example, if an eligible HGV was taxed before 1 July 2026, the operator would have paid the applicable VED rate at that time and cannot claim a refund. The £1 rate will instead be available when the vehicle is next taxed during the temporary reduction period.
Operators should therefore consider the timing of vehicle tax renewals when reviewing their fleet costs over the next 12 months.
What about the HGV levy?
The temporary VED reduction does not remove the requirement to pay the HGV levy where it applies.
The HGV levy will continue to be charged at the applicable rate alongside the £1 VED rate. It will be applied automatically when the vehicle is taxed or renewed.
What do operators need to do?
For eligible vehicles, the reduced rate should be applied automatically when the vehicle is taxed during the qualifying period. Operators do not need to make a separate application for the £1 rate.
However, operators should ensure that their fleet records are up to date and that they understand which vehicles are eligible. It is also worth checking the amount shown on any vehicle tax reminder, as the reminder may not reflect the temporary £1 rate. The correct rate should be applied when the vehicle is taxed.
A temporary saving for operators
The temporary VED reduction provides a significant saving for eligible HGV operators during a period when operating costs remain under pressure.
While the measure is currently limited to 1 July 2026 to 30 June 2027, operators should make sure they take advantage of the reduced rate when eligible vehicles are due for renewal.
The temporary £1 VED rate is already in effect, so operators with HGVs due to be taxed or renewed over the coming months should check their vehicle’s tax class and ensure the correct rate is being applied.