Compliance
Fuel Duty Extensions and HGV VED Cuts: What Drivers and Businesses Need to Know
Recent UK changes extend fuel duty reliefs and cut vehicle excise duty for heavy goods vehicles—this article breaks down who benefits, how, and what to watch out for.
By NomadicTax Research Team • 5-8 min read • June 7, 2026
## Recent Policy Changes (May 2026)
- UK government extended the **5p per litre fuel duty cut** for petrol and diesel **through 31 December 2026**. Planned increases in September and December were **cancelled**. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-143/issue-143-of-agent-update?utm_source=openai))
- From 15 June 2026 until 31 December 2026, the duty on **red diesel** will be cut from **10.18p to 6.48p per litre**. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-143/issue-143-of-agent-update?utm_source=openai))
- A **road tax holiday** for Hauliers: when renewing Heavy Goods Vehicle Vehicle Excise Duty, operators will pay **just £1** for renewals over the next year—saving large sums per vehicle. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-143/issue-143-of-agent-update?utm_source=openai))
- **Mileage allowances** were updated: Approved Mileage Allowance Payments (AMAPs), Mileage Allowance Relief, and self-employed mileage rates have increased and are **backdated** to 6 April 2026. Employers may need to re-run payrolls for April and May if reimbursements were taxed under earlier, lower rates. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-143/issue-143-of-agent-update?utm_source=openai))
## Who Benefits and How Pays Differently
| Stakeholder | Benefit | Practical Impact |
|---|---|---|
| **Motorists & commuters** | Lower fuel bills through year end; red diesel cost cut for those agricultural or freight using it; static road tax for HGV renewals. | Cost of travel and haulage reduces—helps businesses with fuel-intensive operations. |
| **Hauliers / Freight firms** | Huge savings in VED renewal; lower diesel costs. | Cash flow improved; lower operating expenses. |
| **Self-employed / Businesses with travel** | Higher mileage rates to reimburse or claim. | Helps offset wear and tear and fuel costs. Employers may need adjustments. |
## Things to Watch Out For
- **Backdate adjustments**: Employers who reimbursed employees above old mileage rates and deducted tax/NIC might need to re-process payrolls for April and May 2026. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-143/issue-143-of-agent-update?utm_source=openai))
- **Red diesel usage**: Many agricultural, plant hire and transport operations rely on red diesel. The effective rate change from 15 June 2026 through year end must be accounted.
- **Fuel duty cut expiration**: The reliefs currently run until 31 December 2026; from there, unless extended, full duty resumes or planned increases may be reintroduced.
## Example Scenarios
- **Farm business** using red diesel**: Heavy use of red diesel will see immediate cost savings from mid-June through year end. When budgeting, factor in lower duty rates.
- **Haulier renewing VED**: Costs for vehicle renewals drop to £1—if vehicle qualifies. Significant cash savings especially for fleets of heavy trucks.
- **Consultant travelling for work**: Will be able to claim higher AMAPs/MAR rates for business travel incurred since April, possibly needing reworked payroll or self assessment documents.
## Practical Advice & Next Steps
- **Review expenses policies** inside your business or your own records to ensure mileage reimbursements are compliant and optimised.
- **Check eligibility**: whether vehicles qualify for the road-tax holiday; whether your usage of red diesel qualifies for lower duty.
- **Keep meticulous records** of fuel purchases, travel dates, duties paid—particularly for accounting and potential claims.
- **Plan for post-December 2026**: if reliefs lapse, assess what your costs will be and adjust your budgets.
**Takeaway:** The government changes through mid-2026 offer meaningful relief to haulage, fuel users, and those traveling for business—but most beneficios end by end-2026. Timing, eligibility, and backdated claims are important.