Chancellor Rachel Reeves has confirmed the cancellation of the planned 5p fuel duty increase, which was set to take effect tomorrow, May 21. The measure will now be extended for the remainder of the year, ensuring fuel duty on petrol and diesel remains at its lowest rate in over 16 years. By the end of 2026, the cut will have saved the average driver £120 since 2025.
Support for Hauliers and Farmers
The Chancellor is also introducing a 12-month road tax holiday for hauliers, meaning they will pay just £1 at renewal. This will save £600 for a typical heavy lorry and £912 for the largest vehicles on the road. Farmers, rail freight operators, and other red diesel users will see their fuel duty cut by over a third until the end of the year. This is the lowest rate in over 20 years, helping to reduce business costs during a difficult period when red diesel prices are around 50% higher than pre-crisis levels.
Prime Minister and Chancellor Statements
Prime Minister Keir Starmer said: "I know many are feeling the pressure of energy and fuel costs, and are worried about how the conflict in Iran will affect their finances. Because when global events drive up prices, it’s working people who feel it first. That’s why this government is stepping in to keep fuel costs down for millions of drivers and putting money back in the pockets of working people."
Rachel Reeves added: "I’m keeping taxes down for drivers and businesses – putting money in the pockets of millions of workers and cutting costs for farmers and hauliers. The war in Iran is pushing up fuel prices here at home but after strong growth at the beginning of the year, I am stepping in to protect people at the pump. By protecting households and businesses we are building a stronger and more secure economy for Britain. That is the right economic plan."
Industry Reaction
Paul Holland, Managing Director for UK/ANZ Vehicle Payments at Corpay, including UK brand Allstar, commented: "Fuel price volatility has plagued fleets for so long it risks being accepted as the norm, but it shouldn't be. The Chancellor’s reported plans to scrap the planned 5p fuel duty increase is welcome news and will offer some much-needed breathing space for businesses already under pressure."
"That said, the freeze doesn't solve the underlying challenge that fuel remains one of the biggest operational costs for fleets. Our recent research of 300 UK SMB owners and directors who manage fleets of 4 to 20 vehicles shows that just 45% of businesses have meaningful visibility over what their fleet is actually spending, leaving the majority exposed when prices move."
"Businesses that will navigate these turbulent times most effectively are those using data to take control: tracking driver spending patterns, setting tailored spend limits, and acting on detailed insights. The tools exist - the priority now is putting them to work."
