HMRC confirms 53p per litre charges for petrol drivers

Plans to end a temporary cut on fuel duty which would have added 5p a litre back on the cost of petrol and diesel have been pushed back once more, Chancellor Rachel Reeves has confirmed. A fuel duty cut of 5p per litre, first put in place in 2022 by the Conservatives, was then extended by Labour and had been due to end from September 2026, where it would have been phased out in stages of 1-2p at a time until spring 2027.

It would mean that the current temporary fuel duty, which adds 52.95p to every litre of fuel (with VAT then charged on top of the duty), would rise to 57.95p by next March. However, following the cataclysmic rise in petrol and diesel prices following the outbreak of the Iran war, and pressure to ease the cost of living, Chancellor Rachel Reeves has now confirmed that the cut has been extended one more time, until 2027, in a bid to help drivers struggling with the surging petrol prices.

According to the RAC, the average price of petrol now stands at 158.95p per litre for unleaded as of May 25, while diesel sits at 185.54p per litre.

HMRC has confirmed the changes in a policy paper called Amended Fuel Duty rates 2026 to 2027.

There, it said: "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.

"The measure 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.

"The legislative default will be for rates to return to the levels set at Budget 2025 from 1 January 2027, but the government will confirm final rates at Budget 2026."

In its confirmed rates figures, it set the rate at 0.5295 Pounds (£) per litre (effectively 53p), until January 1 2027, where it will rise to 0.5595 and then 0.5795 in March 2027.

HM Treasury said in a statement: “Britain’s motorists and businesses will get help with rising prices at the pumps with a targeted package to keep taxes down and support people with the impact of war in Iran.

“The Government has announced the 5p cut on fuel duty will be extended for the rest of the year.”

Chancellor Rachel Reeves said: “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."