Vehicle Excise Duty 

The measure

Since July, a reduced annual vehicle excise duty (VED) rate of £1 has been available to the majority of heavy goods vehicles (HGVs). The reduced rate applies to VED licences or renewals taken out between 1 July 2026 and 30 June 2027. The government is introducing legislation to ensure that, from 28 October 2026, where this reduced rate is obtained for more than 12 months, any excess benefit may be recoverable from the vehicle keeper as a civil debt. 

Previously, the government announced that search and rescue charities will receive an exemption from VED for eligible vehicles. The government will introduce legislation for the exemption through the Finance Bill. 

The government will uprate VED rates for HGVs, cars, vans and motorcycles in line with the Retail Prices Index (RPI).  

Who will be affected?

Vehicle keepers, and search and rescue charities.  

When will the measure come into effect?

From 28 October 2026, any excess benefit may be recoverable from the vehicle keeper as a civil debt for HGVs obtaining the reduced rate for more than 12 months.  

From 1 April 2027, the government will uprate VED rates for HGVs, cars, vans and motorcycles in line with the RPI for 2027 to 2028. The legislation for the VED exemption for eligible vehicles for search and rescue charities will also come into effect from 1 April 2027.