Rachel Reeves has explained that one set of road users will pay just £1 to use the roads in 2026.
Rachel Reeves has introduced a car tax holiday for one set of drivers (Image: Getty)
Rachel Reeves has confirmed that one group of drivers will pay just £1 to get behind the wheel this year after a major tax update. The Chancellor has revealed haulage firms will enjoy a 12 month Vehicle Excise Duty (VED) holiday, with road users set to save hundreds of pounds in costs.
The Treasury said hauliers will pay just £1 at renewal, saving £600 for a typical heavy lorry and up to £912 for some of the biggest vehicles on the road. With electric cars now paying VED to use the roads, the new rate means lorries and HGVs will be the cheapest vehicles to tax in the UK.
Haulage firms will pay just £1 to renew their tax (Image: Getty)
The Treasury explained that the VED holiday was being introduced because the conflict in the Middle East has pushed up costs for hauliers. Prime Minister Keir Starmer said: “We are giving our hauliers a 12-month vehicle tax holiday, helping to keep prices down, and we are backing drivers by extending the freeze in fuel duty for the rest of the year.”
Experts, including Logistics UK, have previously warned that operators were struggling to absorb rising costs. The Road Haulage Association also stressed that firms were being put under pressure by rising petrol and diesel fuel prices.
The RHA explained that a one-off 12-month HGV VED ‘holiday’ will offer some relief to firms, but stressed the Government’s action will have “limited impact” as they called for further changes.
The group’s biggest demand was for the introduction of an immediate essential user rebate, which would offer firms a chance to reclaim part of the duty paid on fuel
Richard Smith, RHA Managing Director said: “The immediate picture is far more pressing. Cash flow is a huge challenge for transport operators against a backdrop of cost pressures, low margins, and the high rates of insolvency plaguing our sector. Businesses need help now.
The RHA also said that many haulage, coach and van operators were already on the brink as they battled with rising costs.
After the announcement, Rachel Reeves 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.”