HMRC has confirmed that the 5p fuel duty cut will remain in place until 31 December 2026, scrapping two planned increases that were scheduled for 1 September 2026 and 1 December 2026. The main rate of Fuel Duty will stay at 52.95p per litre, providing continued relief for motorists across the UK.
Fuel duty freeze and red diesel changes
The government's tax arm announced the extension amid ongoing pressures linked to the Iran war. Alongside the main rate freeze, the duty rate on red diesel will be cut from 10.18p per litre to 6.48p per litre, effective from 15 June until 31 December 2026. This reduction aims to support industries reliant on red diesel during a period of heightened fuel costs.
HM Treasury has also confirmed additional support measures. Increases to Approved Mileage Allowance Payments (AMAPs), the Mileage Allowance Relief (MAR), and self-employed mileage rates will be backdated to 6 April 2026 for the 2026 to 2027 tax year. The updated rates include a rise to 55p per mile for the first 10,000 miles, while the rate for mileage over 10,001 miles remains at 25p per mile.
Employer guidance on mileage rates
HMRC issued guidance for employers regarding the updated mileage rates. The tax authority stated: “Employers may want to increase the amount they reimburse their employees for business mileage, in line with the new rates.” Employers who have already reimbursed staff above the old rates, where Income Tax and National Insurance contributions have been deducted, may need to re-run payroll for April and May to account for the AMAPs increase.
For employees reimbursed less than the new AMAPs rate, HMRC advises they can claim tax relief for job expenses. The tax authority noted: “The job expenses tax relief claim forms are being updated with the new mileage rates. We’ll confirm in a future Agent Update when the new forms will be live and you can submit a claim for mileage relief.”
Self-employed deadlines and market oversight
Self-employed customers can use the new rates in their 2026 to 2027 tax return. The deadline for paper returns is 31 October 2027, while online filings are due by 31 January 2028.
Minister for Energy Consumers Martin McCluskey previously commented on the situation, saying: “I know the war in the Middle East has hit drivers hard.” He acknowledged that while the Competition and Markets Authority (CMA) found no evidence of retailers exploiting the conflict, the market is still not working as competitively as it should. McCluskey added: “We have stepped in to support motorists by extending the fuel duty freeze for the rest of the year, and our Fuel Finder scheme is already helping drivers find the best deals at the pump. Forecourts must play their part and report their prices, or face a fine.”
