Drivers Told To Prepare For Rise In Fuel Duty

30th August 2024

Drivers across the UK are being warned to expect a rise in fuel duty in the Government's upcoming Autumn Budget.
New Prime Minister Sir Kier Starmer has already stated that there is a £22 billion ‘black hole' in public finances that needs to be filled.

It will be down to Chancellor of the Exchequer Rachel Reeves to tell the country how this will be achieved, but there is guaranteed to be an announcement on the future of fuel duty.

This is a tax imposed by the Government on the sale of petrol and diesel, that is charged per litre of fuel sold. It is included in the overall price paid at the pump.

The purpose of fuel duty is to generate revenue for the government.

In March 2022, the Conservative Government implemented a 5p per litre reduction in fuel duty. Prior to this, the fuel duty rate had been frozen at 57.95p per litre since March 2011. Additionally, VAT is applied at 20% on top of the total price of fuel.

The RAC is calling on retailers to cut petrol and diesel prices for drivers across the UK.

This is because the current fuel cost should reflect the current lower wholesale costs paid by the retailers.

In fact, the RAC suggests that average petrol prices should be reduced from 142p per litre to 136p per litre, and diesel prices from 147p per litre to 139p per litre.

The company noted that retailers' margins - the difference between the purchase price of fuel and the price at the pump - were 10p per litre for both fuels last week, compared to the long-term average of 8p per litre.

RAC head of policy Simon Williams said: "We've reached the conclusion the Chancellor has no option but to put fuel duty back up to 58p a litre in October's Budget.

"She knows the 5p discount is losing the Treasury £2bn a year. She also knows drivers were overcharged by a staggering £1.6bn last year according to the Competition and Markets Authority’s recent report.

"We’d normally be against any increase in duty, but we’ve long been saying drivers haven’t been benefitting from the current discount due to much higher-than-average retailer margins.

“As more and more EVs come on to the roads the Government will need to tax drivers differently. We think replacing fuel duty with a pay-per-mile system as soon as possible is the way forward as then the only tax levied on fuel would be VAT. This would give retailers nowhere to hide."

www.rac.co.uk/