More than £100 million in additional VAT payments from petrol and diesel purchases have now gone to the Exchequer, RAC Foundation analysis suggests.
Between 28 February and 1 April an additional £104.2 million ended up with the Treasury as a result of pump price rises since the start of the war with Iran.
In total, drivers have had to pay an extra £625 million for fuel since the conflict began compared with what they might have paid had fuel prices stayed at the same level they were on the day before fighting started.
The bulk of the excess has been paid by those purchasing diesel. This is because more diesel than petrol tends to be sold in the UK and the price differential between the two fuels is now 30p per litre.
Steve Gooding, director of the RAC Foundation, said:
“Prices at the pumps seem to be on a one way trajectory at the moment and that is resulting in tens of millions of pounds for the Exchequer from motorists in additional VAT income.
“We will have to say how the national tax accounts finally add up but the bigger picture will be hard to see for all those drivers arriving on the forecourts this weekend focused only on the dizzying prices of petrol and diesel right in front of them.”
Of the £104.2 million in additional VAT paid at the pumps some is likely to be reclaimed by VAT-registered businesses.
The proportion of the pump price of petrol which is tax (a combination of fuel duty and VAT) is now 51.5% for petrol. For diesel it is 46%.
The price of a barrel of Brent crude oil is currently well above $100.
According to government data there were 4.6 million vans and 10.3 million cars powered by diesel on the road in the UK as of the end of quarter 3 2025. There were also 18.9 million petrol cars.
ENDS
Contacts:
Philip Gomm – Head of External Communications – RAC Foundation
[email protected] | 07711 776448
Notes to editors:
The RAC Foundation is a transport policy and research organisation which explores the economic, mobility, safety and environmental issues relating to roads and their users.
It is a registered charity. Number: 1002705.
The Foundation publishes independent and authoritative research with which it promotes informed debate and advocates policy in the interest of the responsible motorist. For more information visit www.racfoundation.org