UK drivers will face higher fuel prices within months as the long-standing freeze on fuel duty comes to an end. The excise tax, charged on fuel purchases, currently stands at 52.95p per litre for both diesel and unleaded petrol. It has been frozen since 2011 and was cut by 5p in 2022 following Russia's invasion of Ukraine. The reduced rate has been extended repeatedly over the last four years, most recently by the Labour Government until January 2027.
Planned increases for January and March
Both the fuel duty freeze and the 5p cut are set to be lifted in the new year, meaning drivers will pay more depending on how much they use their vehicles. The duty is expected to rise by 3p to 55.95p per litre in January, before climbing another 2p to 57.95p in March.
Government considers options amid rising prices
Chancellor John Healey has not ruled out extending the 5p cut as pump prices continue to climb because of the US-Iran war. Analysis by the RAC showed diesel has risen to a record of £2 per litre in October, making filling an average family car £32 more expensive than at the outbreak of the Middle East conflict.
Mr Healey said he would announce the decision in the Autumn Budget on October 28. He told ITV: "I'm conscious of the pressure this is putting on people at the pumps and this is a government that will do what we can to give people a bit of breathing space."
Prime Minister weighs measures
Prime Minister Andy Burnham also left the door open to scrapping the planned fuel duty hike, saying "every possible measure" is being considered to ease the cost of driving. He said it is not an overstatement to describe the situation as an energy crisis, with household electricity and gas bills increasing alongside pump prices.
Asked whether he would halt the duty hike, Mr Burnham told the BBC: "I'm considering everything that might help people in very difficult times and I will be honest and say every possible measure is being looked at. The question I've got is: 'How many can I afford? What can we do given the state of the public finances?'"
He also warned that Mr Healey does not have "huge room for manoeuvre" in his first Budget. He said: "We're thinking all of the time: 'How do we take a bit of pressure off people, give them some breathing space?' In the Budget, we will consider further measures. It's important for me to say that we don't have huge room for manoeuvre. I think people can see that when they look at the financial picture, but within that we will do our best, and we'll also try to support people who are struggling with the cost of doing business, because it's hard to run a business right now as well."
