Vehicle Excise Duty rates for heavy goods vehicles and Heavy Goods Vehicles Road User Levy — from 1 April 2025
Published 30 October 2024
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Who is likely to be affected
Owners of heavy goods vehicles (HGVs) and UK and international owners and operators of HGVs within the Heavy Goods Vehicle (HGV) Levy (HGVs of 12 tonnes or more) and holders of trade licences.
General description of the measure
This measure will uprate the Vehicle Excise Duty (VED) rates for HGVs, trade licences and HGV Levy by the Retail Price Index. This is a standard uprating to come into effect from 1 April 2025.
Policy objective
Increasing VED rates by Retail Price Index in 2025 to 2026 will ensure that VED and HGV Levy receipts are maintained in real terms and that motorists make a fair contribution to the public finances.
Background to the measure
This measure was announced at Autumn Budget 2024.
The vehicle registered keeper is responsible for paying VED. The rates depend on the vehicle’s revenue weight, axle configuration and Euro status. VED rates for HGVs and trade licences have been frozen since 2014.
A reformed HGV Levy was introduced in August 2023, and was frozen at Autumn Statement 2023.
Detailed proposal
Operative date
The measure will have effect on and after 1 April 2025 for all HGVs and trade licences.
Current law
Section 1 of the Vehicle and Registration Act 1994 provides for the charging of VED.
Section 2 of Vehicle and Registration Act 1994 provides that VED in respect of a vehicle of any description is chargeable by reference to the applicable rate specified in Schedule 1 to Vehicle and Registration Act 1994.
The HGV levy is established by the HGV Road User Levy Act 2013. Schedule 1 of the Act contains the current rates.
Proposed revisions
Legislation will be introduced in Finance Bill 2024-25 to amend the applicable rates for HGVs and trade licences specified in Schedule 1 to Vehicle and Registration Act 1994. Full details of the new rates are given in Annex A to the Overview of Tax Legislation and Rates.
Schedule 1 of the HGV Road User Levy Act 2013 will also be amended.
Summary of impacts
Exchequer impact (£ million)
| 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 |
|---|---|---|---|---|---|
| — | Negligible | Negligible | Negligible | Negligible | Negligible |
This measure expected to have a negligible impact on the Exchequer.
Economic impact
The measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure will impact on vehicle registered keepers of HGVs and trade licence holders. The increase in VED rates is in line with Retail Price Index meaning rates will remain unchanged in real terms for vehicle keepers.
The measure is not expected to impact on family formation, stability or breakdown.
Customer experience is expected to remain broadly the same as this measure does not make any changes to the operation of the tax.
Equalities impacts
Individuals liable for VED for HGVs are likely to be represented in each of the groups with a shared protected characteristic. Where protected groups are overrepresented, the measure will have a disproportionate impact on that group. Males (77%) are more likely to own a licensed HGV compared to females (23%), and this contrasts to the wider UK adult population, where males and females are equally represented. HMRC does not hold data on the other protected characteristics of people who are registered keepers of HGVs and therefore cannot determine if there are any other equality impacts.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses and civil society organisations which own or sell HGVs by changing their VED liabilities. One-off costs will include familiarisation with the rate change. There are not expected to be any continuing costs.
Customer experience is expected to remain broadly the same as this measure does not make any changes to the operation of the tax.
Operational impact (£ million) (HMRC or other)
There will be negligible financial impact on operational costs for the Driver and Vehicle Licensing Agency (DVLA) and no additional administrative costs for affected HGV keepers.
Other impacts
The government is aware that registered vehicle weight is only an approximation for the CO2 emissions of a vehicle in typical use and that the costs of VED and levy likely make up a small proportion of HGV operating costs. Therefore, any incentive effect arising from changes to the levy structure is likely to be small. However, the changes will be a further step to align the levy with the government’s environmental objectives.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through the DVLA vehicle licensing data, as well as through regular communication with relevant stakeholders across government and industry.
Further advice
If you have any questions about this change, contact the Energy and Transport Taxes team by email: [email protected].