Tax and ownership costs

UK Fuel Duty Rise: How the 5p Cut Phased Reversal Affects You

UK motorists have benefited from a temporary 5p fuel duty reduction since March 2022. Here is how fuel duty is calculated, when the cut ends, and what the eventual return to standard rates will add to your pump prices and annual mileage costs.

Current fuel duty rates explained

Fuel duty is a flat tax levied on every litre of road fuel purchased in the UK. Unlike VAT, which is a percentage of the total transaction price, fuel duty is a fixed pence-per-litre rate regardless of international oil price swings.

In March 2022, the government introduced a temporary 5 pence per litre reduction to help households and businesses manage surging global energy prices, lowering the standard rate from 57.95p down to 52.95p per litre.

Why a 5p duty rise adds 6p at the pump

Fuel tax in the UK involves a double layer of taxation:

  1. The wholesale cost of refined fuel plus retailer margin.
  2. Fuel duty: Added as a flat pence-per-litre charge (currently 52.95p).
  3. Standard VAT (20%): Applied to the combined total of wholesale cost, retailer margin, and fuel duty.

Because VAT is calculated on top of the duty figure, any 5p increase in fuel duty automatically adds an extra 1p of VAT (20% of 5p), producing an effective 6.0p per litre increase on forecourt price displays.

Cost per fill-up: What a 6p pump rise looks like

Here is how reversing the 5p fuel duty cut changes the total cost of filling up common vehicle categories across the UK:

Estimated impact of a 6p per litre (5p duty plus VAT) increase per tank

Vehicle TypeTank CapacityCurrent Fill Cost (145p/L)New Fill Cost (151p/L)Extra Cost Per Tank
Small Hatchback (e.g. Fiesta, Polo)45 Litres£65.25£67.95+£2.70
Family Hatchback / Crossover (e.g. Golf, Qashqai)50 Litres£72.50£75.50+£3.00
Large Saloon / Estate (e.g. 3 Series, A4)60 Litres£87.00£90.60+£3.60
Large SUV / 4x4 (e.g. Land Cruiser, XC90)70 Litres£101.50£105.70+£4.20
Medium Commercial Van (e.g. Transit Custom)80 Litres£116.00£120.80+£4.80

Figures based on representative baseline pump price of 145p/litre. Actual forecourt prices vary by brand and region.

Annual driving cost impact by mileage

The total annual impact depends directly on your annual mileage and your car fuel efficiency (MPG):

  • Low Mileage (6,000 miles/year @ 40 MPG): Consumes roughly 682 litres of fuel, adding approximately £40.92 per year.
  • Average Commuter (10,000 miles/year @ 40 MPG): Consumes roughly 1,136 litres of fuel, adding approximately £68.16 per year.
  • High Mileage / Sales Fleet (18,000 miles/year @ 45 MPG): Consumes roughly 1,818 litres of fuel, adding approximately £109.08 per year.
  • Delivery Van Driver (25,000 miles/year @ 35 MPG): Consumes roughly 3,247 litres of fuel, adding approximately £194.82 per year.

Key fuel duty timeline for UK drivers

Timeline of recent UK fuel duty policies and rates

PeriodFuel Duty RatePolicy Status
2011 to March 202257.95p / litreMain headline rate frozen for over a decade
March 2022 to May 202652.95p / litreTemporary 5p reduction introduced and repeatedly renewed
Current to 31 Dec 202652.95p / litre5p cut confirmed and maintained by HM Treasury
From 2027 onwards57.95p / litre (baseline)Future rate structure and potential phased return to be confirmed in Budget

How drivers can cut running costs

While tax rates are set by the Treasury, small adjustments to your vehicle and driving routine can easily offset a 6p pump price increase:

  • Check tyre pressures monthly: Under-inflated tyres increase rolling resistance, reducing fuel economy by up to 3%.
  • Remove unused roof racks and excess boot weight: Carrying unnecessary weight or aerodynamic drag forces the engine to burn more fuel.
  • Smooth driving style: Anticipating traffic and easing off the throttle saves significantly more fuel than hard braking and rapid acceleration.
  • Compare vehicle road tax and running costs: If you are considering switching cars, calculate official road tax bands and efficiency with the Caroat Car Tax Calculator.

Sources

FAQ

What is the current UK fuel duty rate?

Standard fuel duty for petrol and road diesel is 52.95 pence per litre. This rate includes a temporary 5 pence per litre cut first introduced in March 2022 and extended through to 31 December 2026.

How much will petrol and diesel pump prices rise when the 5p cut ends?

Because VAT is charged at 20% on top of fuel duty, reversing the 5 pence per litre cut adds exactly 6 pence per litre to forecourt prices at the pump (5p duty plus 1p VAT).

When does the fuel duty 5p cut end?

The UK government confirmed that the full 5p per litre reduction remains in place until 31 December 2026. Long-term rates and any phased reversal timeline from 2027 onwards will be determined in upcoming Budget announcements.

How much extra does a 5p duty reversal cost per tank?

A 6p per litre price increase (5p duty plus 20% VAT) adds roughly £3.00 to fill a typical 50-litre hatchback tank, £3.60 for a 60-litre family car, and £4.20 for a 70-litre SUV or commercial van tank.

All articles · Home