Chancellor Rachel Reeves has confirmed that drivers filling up with E5 or E10 unleaded petrol will continue to face charges of approximately 53p per litre at the pumps. This follows the Labour Party Chancellor's decision to freeze fuel duty, extending the temporary 5p per litre cut first introduced in March 2022 until 31 December 2026.
Extension of Fuel Duty Cut
The measure applies to manufacturers, importers, distributors, retailers, and household and business consumers of petrol, diesel, and other fuel products subject to Fuel Duty. The Labour government's website states: "This measure will extend the temporary 5 pence per litre (ppl) cut in the rates of Fuel Duty, first introduced at Spring Statement in March 2022, until 31 December 2026." It also provides a further reduction to the rebated rate for gas oil (red diesel), biodiesel, and bioblend by 3.7 ppl from 15 June 2026 to 31 December 2026.
Future Rates and Government Plans
The government has indicated that the legislative default will be for rates to return to the levels set at Budget 2025 from 1 January 2027, but final rates will be confirmed at Budget 2026. Current rates show unleaded petrol at around 53p per litre until New Year's Eve.
Prime Minister Sir Keir Starmer told MPs at Prime Minister’s Questions on 20 May that the 5p per litre fuel duty cut introduced by the Conservative government in March 2022 would be extended for the rest of the year. The announcement means the rate will remain at nearly 53p per litre.
Impact on Motorists
Rates were previously set to rise in September before gradually returning to previous levels over the next five years. Steve Gooding, director of motoring research charity the RAC Foundation, commented: "Although today’s news on fuel duty won’t have the immediate effect of bringing forecourt prices down, at least it shows that ministers have registered the financial pain caused by rampant pump prices for individuals and for business. Since the start of the Iran conflict drivers have already paid a war premium of a staggering £3 billion in inflated fuel prices, half a billion of which has gone to the Exchequer in VAT receipts."
