Tax and duty
Fuel duty and VAT, explained
Two separate taxes are built into every litre of fuel you buy. Here's what they are and how they differ.
Fuel duty (per litre, petrol and diesel)
52.95 pence per litre
A temporary 5p/litre cut, first introduced March 2022, extended at Autumn Budget 2025 to run through 31 December 2026.
Source: GOV.UK, Amended Fuel Duty rates: 2026 to 2027VAT on fuel (applied to price + duty)
20% (standard rate)
Petrol and diesel are not on GOV.UK's reduced or zero-rate lists, so the standard rate applies.
Source: GOV.UK: VAT ratesThese figures are verified.
What is fuel duty?
Fuel duty is a tax charged by the UK Government on every litre of petrol and diesel sold. It is a fixed amount per litre, set in pence rather than as a percentage, so you pay the same duty on a litre of fuel whether the underlying price is high or low. Because it's fixed, fuel duty makes up a larger share of the total price when fuel is cheap, and a smaller share when fuel is expensive.
What is VAT?
Value Added Tax (VAT) is charged as a percentage of the total fuel price, including fuel duty. This means VAT is applied on top of duty, not the other way round. Because it's percentage-based, the amount of VAT you pay rises and falls in line with the underlying price of fuel.
Fixed tax vs percentage-based tax
Fuel duty (fixed per litre)
A set number of pence charged on every litre, regardless of price. If the fuel price falls, fuel duty stays the same, so it becomes a bigger proportion of what you pay.
VAT (percentage-based)
A percentage of the fuel price plus duty. If the fuel price rises, the amount of VAT you pay rises too, because it's calculated as a share of a larger number.
Calculating the tax component
Using the verified rates above: fuel duty is a flat 52.95 pence on every litre. VAT is then charged at 20% on the fuel price including that duty. For example, on a litre priced at 175.3p (UK average petrol, week commencing 12 October 2026): the pre-VAT price is 175.3p ÷ 1.2 ≈ 146.1p, so VAT is roughly 29.2p. Added to the 52.95p duty, tax makes up around 82p of that litre, about 47% of the total pump price. See our full pump price breakdown for the complete picture, including wholesale cost and retailer margin.
What is in a pump price, and who can change it?
Four parts add up to the price on the forecourt sign. The boxes show what each part is, not how big it is; the proportions change from week to week.
1. Set by the market
Oil, refining and shipping
- International crude oil prices and the exchange rate.
- Refining and delivery to the forecourt.
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These costs move with world markets and are not set by the UK government. They are already inside the weekly price we show. We do not publish a split of this part, because no verified public split exists.
2. Set by the market
Retailer margin
- What the forecourt keeps to cover its costs and profit.
- Set by each retailer, in a market the CMA monitors.
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The Competition and Markets Authority reports market-wide average margins. They vary by retailer, place and week. Our Follow the Money page shows the latest CMA figure.
3. Set by government
Fuel Duty
- A flat tax charged per litre, set by government.
- 52.95p a litre now.
- Scheduled: 55.95p from 1 January 2027.
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Fuel Duty is charged per litre whatever the price, so it is a larger share of the pump price when fuel is cheap and a smaller share when fuel is dear.
4. Set by government
VAT
- 20% charged on the price including Fuel Duty.
- Set by government.
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Because VAT is charged on a price that already includes Fuel Duty, a change to the duty also changes the VAT collected. At 20%, VAT is one-sixth of the VAT-inclusive pump price.
Government can influence
- The rate of Fuel Duty.
- The rate of VAT.
- How closely fuel pricing and competition are monitored, and how transparent prices are (for example through the Fuel Finder scheme).
Government cannot directly control
- The world price of crude oil.
- Exchange rates, refining and shipping costs.
- The price any individual retailer chooses to charge.
Campaign commentaryTaxes are only part of the price, and not every rise at the pump comes from them. FCE's case is that the parts government does set should be decided with the evidence in view, and that prices should be more transparent.
Sources: GOV.UK, Amended Fuel Duty rates 2026 to 2027 (opens in a new tab) · GOV.UK, VAT rates (opens in a new tab). Fuel Duty is scheduled to rise to 55.95p on 1 January 2027 and 57.95p on 1 March 2027 under current legislation; final rates are to be confirmed at Budget 2026.
Budget 2026 is scheduled for 28 October 2026. It has not yet taken place, so the future rates shown are scheduled, not final. Sources: HM Treasury (opens in a new tab), GOV.UK rates (opens in a new tab). Checked 11 October 2026.
Why does this matter? What we mean by a fuel crisis: affordability, not just supply.
Fuel Duty is a policy choice, not a fixed law
The current era: 2022 to today
Fuel Duty rates since the Spring Statement 2022 cut, including scheduled future changes (final rates to be confirmed at Budget 2026).
Budget 2026 is scheduled for 28 October 2026. It has not yet taken place, so the future rates shown are scheduled, not final. Sources: HM Treasury (opens in a new tab), GOV.UK rates (opens in a new tab). Checked 11 October 2026.
- 23 March 2011Previous rate57.95p/litre
Pre-2022 base rate
Budget 2011's 'fuel duty stabiliser' cut the rate by 1p, from 58.95p to 57.95p. It then stood unchanged for almost exactly 11 years, until the Spring Statement 2022 cut below. See the full 1989–2022 history further down this page.
Source: GOV.UK, Amended Fuel Duty rates: 2026 to 2027 - 23 March 2022Previous rate52.95p/litre
Spring Statement 2022: temporary 5p/litre cut
In response to fuel prices and the invasion of Ukraine, the Chancellor cut Fuel Duty by 5p/litre, from 57.95p to 52.95p, initially for 12 months.
Source: GOV.UK: Spring Statement 2022 Fuel Duty factsheet - 15 March 2023Previous rate52.95p/litre
Spring Budget 2023: cut extended
The 5p cut was extended for a further 12 months, cancelling a previously planned RPI increase.
Source: HM Treasury Spring Budget 2023 - 6 March 2024Previous rate52.95p/litre
Spring Budget 2024: cut extended again
The 5p cut was extended again, with the rate remaining at 52.95p.
Source: HM Treasury Spring Budget 2024 - 30 October 2024Previous rate52.95p/litre
Autumn Budget 2024: cut extended a further year
The 5p cut was extended for a further 12 months, pushing its scheduled expiry to 22 March 2026.
Source: GOV.UK / HM Treasury Autumn Budget 2024 - 26 November 2025Previous rate52.95p/litre
Autumn Budget 2025: further extension, later revised
The 5p cut was extended by a further 5 months to 31 August 2026, with a phased reversal originally scheduled for 1 September and 1 December 2026. This specific schedule was subsequently superseded by a statutory instrument in May 2026. See below.
Source: GOV.UK, Fuel duty rates: 2026 to 2027 (original schedule, since amended) - 15 June 2026Current rate52.95p/litre
Current rate, extended to 31 December 2026
A statutory instrument (SI 2026/555) cancelled the previously scheduled September and December 2026 increases and extended the 52.95p rate to run through 31 December 2026.
Source: The Excise Duties (Surcharges or Rebates) (Hydrocarbon Oils etc.) (Amendment) Order 2026 (SI 2026/555) - 1 January 2027Scheduled future rate55.95p/litre
Scheduled rate change: 1 January 2027 (final rate to be confirmed at Budget 2026)
Under the current legislative default the rate rises to 55.95 pence per litre from this date, a partial unwinding of the 2022 cut. GOV.UK says the government will confirm final rates at Budget 2026, so this is a scheduled rate, not a final one.
Source: GOV.UK, Amended Fuel Duty rates: 2026 to 2027 - 1 March 2027Scheduled future rate57.95p/litre
Scheduled rate change: 1 March 2027 (final rate to be confirmed at Budget 2026)
Under the current legislative default the rate rises to 57.95 pence per litre from this date, a full return to the rate that applied before the March 2022 cut. As above, the government says final rates will be confirmed at Budget 2026.
Source: GOV.UK, Amended Fuel Duty rates: 2026 to 2027 - 1 April 2027Proposed — not yet confirmed
Possible return to RPI-linked uprating
The Government has stated an intention to resume RPI-linked (inflation-linked) annual increases from this point. This is a stated policy intention only. It is not yet set in legislation, and no confirmed rate exists for this or any later date.
Source: HM Treasury Budget statements (policy intention, not yet legislated)
The full picture
Fuel Duty since 1989
Every verified rate change from the modern duty structure's introduction to the start of the current era.
Fuel Duty rate changes, 1989–2011
HistoricalEvery rate change from the introduction of the modern duty structure to the start of the current era (2011, when the rate settled at 57.95p until the 2022 cut — see the timeline above). Sourced from two independently verified primary sources: the House of Commons Library's citation of HMRC's own Hydrocarbon Oils Statistical Bulletin (1989–2007), and GOV.UK's weekly road fuel prices series (2008–2011) — the same dataset used throughout this site's historical pump-price data.
| Date | Rate | What happened |
|---|---|---|
| 14 March 1989 | 17.72p | Unleaded petrol duty rate set in the 1989 Budget.Source: House of Commons Library, SN/EP/4800, Table 2 (HMRC Hydrocarbon Oils Statistical Bulletin) |
| 20 March 1990 | 19.49p | Unleaded petrol duty rate set in the 1990 Budget.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 19 March 1991 | 22.41p | Unleaded petrol duty rate set in the 1991 Budget.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 10 March 1992 | 23.42p | Unleaded petrol duty rate set in the 1992 Budget.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 16 March 1993 | 25.76p | Unleaded petrol duty rate set in the March 1993 Budget.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 30 November 1993 | 28.32p | The Autumn 1993 Budget committed to raising Fuel Duty by at least 3% above inflation every year (later raised to 5%, then 6%), the policy that became known as the fuel duty escalator.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 29 November 1994 | 30.44p | Escalator-driven increase.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 1 January 1995 | 31.32p | Rate change recorded by HMRC at the start of 1995.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 28 November 1995 | 34.30p | Escalator-driven increase.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 26 November 1996 | 36.86p | The rate that was in force when the Labour government took office in May 1997.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 2 July 1997 | 40.28p | Rate set in the new Labour government's first Budget, which increased the escalator commitment to 6% above inflation per year.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 17 March 1998 | 43.99p | Escalator-driven increase.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 9 March 1999 | 47.21p | The last escalator-driven increase before the policy was discontinued.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 21 March 2000 | 48.82p | Standard unleaded petrol rate. The fuel duty escalator had already been abandoned by this point.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 1 October 2000 | 47.82p | Following the September 2000 fuel price protests, a new Ultra Low Sulphur Petrol (ULSP) duty rate was introduced below the standard unleaded rate, to encourage cleaner fuel. ULSP became the near-universal UK forecourt fuel within a few years, so from this point we track its rate as the headline figure.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 7 March 2001 | 45.82p | ULSP rate cut in the 2001 Budget.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 1 October 2003 | 47.10p | This is the same rate independently confirmed by GOV.UK's weekly road fuel prices series, which begins tracking from June 2003. The two primary sources agree exactly.Source: House of Commons Library, SN/EP/4800, Table 2, cross-confirmed by GOV.UK/DESNZ weekly road fuel prices |
| 7 December 2006 | 48.35p | Rate increase.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 1 October 2007 | 50.35p | The last rate change directly documented in the 2008 House of Commons Library briefing; later changes below are sourced to GOV.UK's own weekly price series.Source: House of Commons Library, SN/EP/4800, Table 2 |
| 1 December 2008 | 52.35p | Widely reported at the time as a duty increase timed to partially offset the temporary VAT cut (17.5% to 15%) introduced the same month, so the pump price effect of the VAT cut was smaller than it would otherwise have been.Source: GOV.UK/DESNZ weekly road fuel prices (first weekly report at this rate) |
| 6 April 2009 | 54.19p | Rate increase.Source: GOV.UK/DESNZ weekly road fuel prices (first weekly report at this rate) |
| 7 September 2009 | 56.19p | Rate increase.Source: GOV.UK/DESNZ weekly road fuel prices (first weekly report at this rate) |
| 5 April 2010 | 57.19p | Rate increase.Source: GOV.UK/DESNZ weekly road fuel prices (first weekly report at this rate) |
| 4 October 2010 | 58.19p | Rate increase.Source: GOV.UK/DESNZ weekly road fuel prices (first weekly report at this rate) |
| 3 January 2011 | 58.95p | Rate increase, the peak rate before the 2011 Budget cut below.Source: GOV.UK/DESNZ weekly road fuel prices (first weekly report at this rate) |
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