Rachel Reeves has launched a new car tax fee this week with thousands of drivers set to pay just £1 to use the road.
Rachel Reeves has introduced a new £1 tax fee this week (Image: Getty)
Rachel Reeves has introduced a new £1 car tax fee with as many as 680,000 drivers in the UK likely to be affected by the update. The Chancellor of the Exchequer has overseen a car tax holiday for HGV operators, with the new rule coming into effect earlier this week.
Hauliers will pay just £1 when they renew their Vehicle Excise Duty between July 1 and June 30, 2027, meaning road users can benefit whenever they are scheduled to renew. The Road Haulage Association (RHA) explained the changes in a crucial update to operators around the UK.
Hauliers are set for a major tax discount (Image: Getty)
The RHA said: “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.”
Data from the RHA suggests that there are as many as 58,262 road freight enterprises in the UK. The experts have previously stressed that there are around 684,000 HGV drivers in the country.
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 discount has been applied after the sector was disproportionately impacted by rising fuel costs amid the conflict in Iran.
HMRC said the measure would reduces costs for UK hauliers and will have “no disproportionate impact on individuals”.
The British Vehicle Rental and Leasing Association (BVRLA) explained: “The measure will apply to a range of vehicle tax classes, including HGVs (TC01), HGV trailers (TC02), small islands vehicles (TC16), combined transport vehicles (TC23) and special types vehicles (TC57).”
The Government has explained that the policy will lead to savings of £600 for a typical heavy lorry. The biggest vehicles on the road will save even more money, around £912 per year according to estimates.
Rachel Reeves previously 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.”