The temporary 5p per litre fuel duty cut will remain in place for the rest of 2026, HMRC has confirmed, as new Prime Minister Andy Burnham and Chancellor John Healey inherit the policy from the previous government.
The cut, first introduced by the Conservatives in March 2022 and extended by Labour, was due to end in September 2026, with a phased increase of 1-2p per litre until spring 2027. However, former Chancellor Rachel Reeves pushed back the end date in May, and HMRC has now confirmed the extension until 31 December 2026.
Current and future fuel duty rates
The current temporary rate is 52.95p per litre, effectively 53p when rounded. Under the original plan, this would have risen to 57.95p by March 2027. HMRC's policy paper, "Amended Fuel Duty rates 2026 to 2027," states the rate will remain at 0.5295 pounds per litre until 1 January 2027, then rise to 0.5595 and finally 0.5795 in March 2027.
According to the RAC, the average price of petrol on 24 July 2026 was 155.57p per litre for unleaded, while diesel was 172.14p per litre.
Government response and cost-of-living measures
HM Treasury said: “Britain’s motorists and businesses will get help with rising prices at the pumps with a targeted package to keep taxes down and support people with the impact of war in Iran. The Government has announced the 5p cut on fuel duty will be extended for the rest of the year.”
No indication has been given on whether Burnham will extend the cut again in 2027. In his first week, he announced a cost-of-living drive including a six-month VAT cut on electricity bills, a £2 bus fare cap, and reduced VAT for pubs and clubs. At his inaugural Cabinet meeting, he said his would be a “cost-of-living Government.”
