Duty rate to remain at 52.95p per litre
The planned 1p rise in the rate of fuel duty set for September this year is to be postponed, the government has announced.
Speaking at Prime Minister’s Questions Keir Starmer told MPs that the current rate of 52.95p would now stay the same until the end of the year.
Fuel duty had previously been cut by 5p per litre from 57.95p in March 2022 in response to soaring oil prices caused by the Russian invasion of Ukraine.
In the November 2025 Budget the Chancellor had announced that the cut would be reversed “in three stages: 1p on 1 September 2026, 2p on 1 December 2026 and 2p on 1 March 2027. This will return rates to pre-March 2022 levels. The planned inflation increase for 2026-27 will not take place, with the government uprating fuel duty rates by Retail Prices Index (RPI) from April 2027.”
The PM also announced that hauliers would get “a 12-month road tax holiday saving up to £912 per vehicle” and that the rate of duty on red diesel is to be cut.
Steve Gooding, director of the RAC Foundation, said:
“Although today’s news on fuel duty won’t have the immediate effect of bringing forecourt prices down at least it shows that ministers have registered the financial pain caused by rampant pump prices for individuals and for business.
“Since the start of the Iran conflict drivers have already paid a ‘war premium’ of a staggering £3 billion in inflated fuel prices, half a billion of which has gone to the Exchequer in VAT receipts.
“The biggest burden from the fuel cost hike has fallen on drivers of diesel vehicles, including the nation’s 4.6 million vans, which is a nightmare for businesses and the logistics sector, but is also going to make its way through to us all as consumers – whilst the cost of diesel has eased slightly it is still 27p per litre more expensive than petrol, on average.”
The RAC Foundation has been estimating the extra that drivers have been paying at the pump since the end of February because of the war in the Persian Gulf, and also what proportion of it is VAT:
Some of the VAT paid is likely to be reclaimed by VAT-registered businesses.
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. 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