Fuels: VAT
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the level of additional VAT revenue accruing to the Exchequer as a result of recent increases in fuel prices; and whether she has considered using additional VAT receipts to provide further targeted financial support to sectors most affected by fuel cost increases, including haulage firms and agricultural producers.
Answered by Dan Tomlinson
There is no VAT windfall from rising fuel or energy prices. The OBR assumes a direct offset, with higher spending on fuel largely matched by reduced spending elsewhere, leaving overall VAT receipts broadly unchanged. Previous OBR analysis also shows that higher domestic energy prices can reduce VAT revenues, reflecting this offset.
More broadly on fuel, the Government is taking steps to support motorists and other fuel users across the UK in response to elevated fuel prices. The Government announced on the 20 May that we are extending the temporary 5p cut to 31 December 2026, ensuring there will be no increases in fuel duty this year.
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