Chancellor John Healey has confirmed the 5p fuel duty cut will be extended until July 2027, with increased mileage rates for business drivers, in a move affecting motorists across the UK.
Delivering the Autumn Budget to the House of Commons, Mr Healey said millions of families will benefit from the changes announced, whether through savings on food shops or receiving extra payments to help with energy bills. He also shared updates on fuel duty and mileage rates.
Fuel duty cut extension
The fuel duty cut, originally due to end on December 31, will now run until July 2027. The Chancellor said the extension is due to the war in the Middle East still driving high fuel prices.
The cut was introduced by the Conservative government in spring 2022 to freeze fuel duty at 52.95p per litre for both petrol and diesel.
Mr Healey told MPs: “Earlier this year, the Government extended the 5p cut to fuel duty and slashed red diesel to its lowest rate in over 20 years.
“With the war in the Middle East still driving high fuel prices, I am extending these tax cuts for motorists through the winter and spring to July, supporting households, hauliers, and farmers.”
Increased mileage rates
The Chancellor is locking in the 55p per mile rate for the first 10,000 business miles and increasing the rate above 10,000 miles from 25p to 35p per mile. This supports around three million employees and self-employed people who use their own vehicle for work.
The change means workers who rely on their vehicle for their job can receive greater support with the costs of fuel, servicing and other motoring expenses. This is the biggest increase in mileage rates for 15 years.
The Chancellor said: “For anyone who relies on their car for their work, from care workers to engineers, I am increasing the higher mileage rate from 25p to 35p per mile, and making permanent the increase to the standard mileage rate introduced earlier this year.”
These changes will provide £120 a year in additional tax savings for a worker doing 6,000 business miles, with someone driving 15,000 business miles receiving up to £300 in additional tax savings.
