HMRC has confirmed that petrol and diesel drivers across the country will continue to benefit from cheap costs following the decision to extend the freeze on fuel duty.
In the Autumn Statement last October, Chancellor Rachel Reeves confirmed that the Government would continue to protect motorists by freezing the rate of fuel duty.
The five pence per litre cut to fuel duty will be extended for a further 12 months and the planned increases in line with inflation for 2025-26 will be cancelled.
This means the fuel duty freeze will expire on March 22, 2026, with the average car driver expected to save £59. The tax cut will save around £3billion for motorists over 2025-26.
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The new changes will take effect from March 23, 2025
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HM Revenue and Customs have confirmed that the 5p per litre cut will end in March 2026. This, coupled with the scrapping of the planned inflation hike, represents a reduction of around seven pence per litre for petrol and diesel rates.
It will also maintain the cut in the rates for heavy oil like diesel and kerosene back down to a rate of 52.95p per litre.
HMRC confirmed that the change would come into effect from March 23, 2025, despite being announced by the Chancellor in October’s Autumn Statement.
It is estimated that the measure will have “a positive overall impact” for 36 million people by maintaining the level of fuel duty.
The fuel duty cut was originally introduced by former Chancellor Rishi Sunak in March 2022 in the wake of the Russian invasion of Ukraine, which sent global oil prices spiralling.
The temporary 12-month cut aimed to save the average car driver £100, while the average van driver could avoid extra costs of £200. The average haulier was estimated to save £1,500 over the year.
This was again extended by Chancellor Jeremy Hunt in 2023 and 2024 before Labour’s Rachel Reeves confirmed an additional year of savings last October.
At present, the average price of petrol costs 138.98p per litre, while diesel drivers are paying around 145.79, RAC Fuel Watch reports.
Drivers have dealt with fluctuating petrol and diesel prices for the last three years, with global oil costs and geopolitical issues in the Middle East impacting the price of fuel.
The RAC forecasts that the price of petrol and diesel, as well as super unleaded and premium diesel, should fall in the near future.
Alongside Labour’s announcement to extend the fuel duty freeze, it also confirmed plans that a “Fuel Finder” tool would be launched to help bring down the price of petrol and diesel.
The open data scheme will require supermarkets and major retailers to publish live prices on a central database to help motorists find the cheapest fuel prices in their local area.
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The 5p fuel duty freeze is set to expire in March 2026
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Scenario modelling by the Government suggests that prices at the pump could be cut by between one and six pence per litre thanks to the increased competition among retailers.
The Fuel Finder tool would also require filling stations to notify drivers of prices and the availability of fuel within 30 minutes of a change. It is expected to launch by the end of the year.
