Autumn Budget: 5p cut in fuel duty extended to July 2027
The UK government has extended the 5p per litre reduction in fuel duty until July next year.
The cut to the levy had been due to expire on 31 December 2026, but the total duty on fuel will now be held at 52.95p per litre.
Announcing the extension, chancellor John Healey said the decision was down to “the war in the Middle East still driving high fuel prices”.
Leader of the opposition Kemi Badenoch said she was “glad to see” fuel duty temporarily frozen, but questioned why it could not be maintained at that rate for longer. “We [the Conservative Party] froze fuel duty for 14 years – they can do better than that,” she said.
Edmund King, president of motoring body the AA, said the duty freeze “only delays […] the price shock” when it is increased.
King said the government “could have gone further and cut fuel duty by an extra 5p, even if only for diesel”, arguing that increased income from VAT – off the back of inflated prices – could have offset a resulting loss in revenue. “Delaying the fuel duty increase is a welcome trick, but no treat for drivers,” he said.
Mileage rates
The government is also raising its approved mileage rates for business drivers.
The rate for motorists covering less than 10,000 miles per year was temporarily raised from 45p per mile to 55p for the current tax year. This rise is now permanent, said Healey.
Meanwhile, the rate for those covering more than 10,000 miles annually has risen from 25p to 35p.
EV charging
Healey confirmed that the temporary removal of VAT on domestic electricity will be extended until July next year. Although this measure is not directly targeted at motorists, those capable of charging electric vehicles from home stand to make savings as a result.
However, electricity drawn from a public EV charger will continue to be charged VAT at a rate of 20%.
King said this “widens the pavement tax” – the inequity between those capable of home charging and those who cannot – and called it a “missed chance” to incentivise uptake of EVs.
This is a breaking news story and will be updated with more information in due course
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