The UK government has confirmed the continuation of the 5p fuel duty cut, offering some relief for motorists facing soaring costs. First introduced during the pandemic to mitigate rising fuel prices, the cut will remain in place until at least September 2026. However, the phased return to pre-2022 fuel duty rates will begin after that, causing concern among drivers who fear the eventual price hikes.
This fuel duty cut, while temporary, has been a key measure in alleviating the financial strain on households and businesses, many of whom rely on cars for daily commuting. According to the Treasury’s latest statement, the extension aims to help the average motorist navigate the next few years, providing a cushion against inflation-driven price increases.
Extending the Cut Until 2026
The temporary 5p fuel duty cut, first introduced in March 2020 during the pandemic, was extended by Chancellor Jeremy Hunt in November 2023. Initially set to end in April 2024, the government announced that the cut would be prolonged until September 2026, offering some much-needed relief to drivers in the short term. According to a statement from Rachel Reeves, the Labour MP for Chipping Barnet, the 5p cut will provide the average car owner with £49 in savings compared to earlier plans.
However, the government also warned that this extension would be followed by a gradual return to the previous fuel duty rates starting in autumn 2026. The cuts will ultimately be phased out by March 2027, with rates returning to pre-2022 levels. This marks the first increase in fuel duty in 16 years, and many experts anticipate a significant rise in fuel costs once the full reversal is complete.
The timing of this change is significant for both motorists and the economy at large. Given the rising cost of living, the extension of the fuel duty cut aims to offer temporary relief, but it will not be enough to shield drivers from the broader financial pressures. The announcement comes amidst growing concerns about affordability for both individual drivers and businesses that rely on fuel for transportation and deliveries.
Government’s New Rules on Fuel Price Transparency
In addition to extending the fuel duty cut, the government is introducing measures to promote transparency in fuel pricing. According to the Treasury’s statement, petrol forecourts will be required to share real-time price rises with consumers through a new initiative called Fuel Finder. This move is designed to help motorists find the cheapest fuel available, which could result in savings of approximately £40 per year for the average household.
The goal of the Fuel Finder tool is to increase competition between petrol stations and ensure that any reductions in wholesale fuel prices are passed on to consumers. While this new rule aims to enhance transparency, it also addresses growing concerns that not all petrol stations have been passing on reductions in fuel costs to drivers. This could be particularly helpful during periods of market volatility, when wholesale prices fluctuate and consumers feel the impact at the pump.
Despite the government’s attempts to ease the burden on drivers through price transparency, industry experts remain cautious. Some predict that fuel prices could still rise significantly once the fuel duty cuts are phased out. In particular, the gradual return to pre-2022 fuel duty rates could add as much as £3.30 to the cost of a full tank of fuel, which many drivers will find difficult to absorb.
