Fuels: Excise Duties and VAT
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of (a) fuel duty and (b) VAT on trends in the level of cost of petrol and diesel for consumers.
Answered by Dan Tomlinson
The Government is already taking action to ensure that fuel at the pump remains affordable.
At Budget 2025, the Government extended the 5p-per-litre cut for a further five months, until the end of August this year. The Government has also cancelled the increase in line with inflation for 2026/27; instead, rates will only gradually return to early 2022 levels by March 2027.
Since Autumn Budget 2024, the Government's decisions to freeze fuel duty will save the average motorist over £90 – or 8-11 pence per litre –compared to the plans inherited from the previous government.
Prices are set by petrol retailers taking into account wholesale costs; fuel duty is a fixed levy and VAT applied as a percentage of the prices retailers charge.
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