Fuel duty has been frozen at 52.95p per litre
Cost of living crisis means it’s the wrong time for extra taxes at the pump, said chancellor Rachel Reeves
Fuel duty has been frozen for another year, chancellor Rachel Reeves has announced in the Autumn Budget.
The current rate of 52.95p per litre will be retained through 2025-2026.
Reeves said: “I have concluded that in these difficult circumstances, while the cost of living remains high, and with the backdrop of global uncertainty, increasing fuel duty would be the wrong decision.
“It would mean fuel duty rising by 7p per litre, so I have decided today to freeze fuel duty, and I will maintain the existing 5p cut for another year too.
“There will be no higher taxes at the petrol pumps next year.”
In the build-up to the budget there had been multiple reports the chancellor could remove the 5p cut in fuel duty, introduced in March 2022, to raise extra government funding.
Reeves said that reversing the 5p per litre cut and allowing duties to rise in line with inflation (for the first time since 2011) would have raised £3 billion.
She also announced that company car tax incentives for electric vehicles will be maintained from 2028.
Reeves said that the government will “increase the differential” between the first-year rates of vehicle excise duty (VED) for electric and combustion-engined vehicles from April 2025 – when EVs will be required to begin paying for VED.
It is more likely that the government will hike rates for combustion-engined vehicles rather than cut them for EVs, however.
Changes to VED will raise £400 million, Reeves said.
The chancellor added that the government has reserved more than £2 billion in funding for the nation’s automotive sector, “to support our electric vehicle industry and develop our manufacturing base”.
Finally, Reeves announced a £500 million increase to funding for road maintenance next year, in a commitment to fix an extra million potholes annually.
Notably, the chancellor did not announce any measures to incentivise private buyers to go electric. The Society of Motor Manufacturers and Traders (SMMT), which represents the UK’s automotive industry, has previously called for VAT on new EVs to be halved for three years.
