Fuel duty hike expected in Autumn Budget
The government is expected to announce 10p rise in fuel duty in the upcoming Autumn Budget.
Fuel duty is the tax imposed by government on the sale of petrol and diesel and is included in the price paid at the pumps.
The previous government introduced a 5p cut in fuel duty in March 2022 in an effort to ease the burden on motorists, but this costs the Treasury about £2bn a year and new Prime Minister Sir Kier Starmer is widely expected to reverse the policy as part of plans to tackle what he has described as a £22bn black hole in public finances.
Edmund King, president of The AA, said:
“The car is the main form of transport for the majority of passenger journeys and almost all deliveries to shops and homes are by road. Any hike in fuel duty could backfire by fuelling inflation and hitting those in rural areas who have no alternative to the car, disabled drivers, and low-income shift workers.”
However, the RAC has backed the proposed fuel duty rise, arguing that the 5p freeze has not benefited drivers with retailers continuing to inflate forecourt prices.
RAC head of policy Simon Williams said:
“We’ve reached the conclusion the Chancellor has no option but to put fuel duty back up to 58p a litre in October’s Budget. We’d normally be against any increase in duty, but we’ve long been saying drivers haven’t been benefitting from the current discount due to much higher-than-average retailer margins.
“As more and more EVs come on to the roads the government will need to tax drivers differently. We think replacing fuel duty with a pay-per-mile system as soon as possible is the way forward as then the only tax levied on fuel would be VAT. This would give retailers nowhere to hide.”
