Fuel Duty 2025/26: What It Is, What You're Actually Paying, and What's Frozen
Fuel duty has been frozen at 52.95p per litre since March 2022 — and the Spring Statement 2026 extended that freeze again. But duty is only part of what you pay at the pump. Here's the full breakdown of what makes up petrol and diesel prices in 2025/26.
What Is Fuel Duty?
Fuel duty (officially Hydrocarbon Oil Duty) is an excise duty applied to motor fuels at the point they leave the refinery or enter the UK. It's charged per litre at a flat rate, regardless of the pump price.
Current rates (2025/26):
| Fuel type | Duty rate |
|---|---|
| Unleaded petrol | 52.95p/litre |
| Diesel (ULSD) | 52.95p/litre |
| LPG (autogas) | 28.88p/kg |
| Natural gas (CNG) | 24.70p/kg |
| HVO (Hydrotreated Vegetable Oil) | 52.95p/litre (same as diesel) |
| Biodiesel blend >30% | Lower rate (variable) |
Petrol and diesel are taxed identically, despite diesel having higher energy density (and therefore better fuel economy per litre).
How Pump Price Is Built Up
For a litre of petrol at 135p (approximate UK average, early 2025):
| Component | Amount | % of pump price |
|---|---|---|
| Wholesale oil (crude oil) | ~35p | 26% |
| Refining costs | ~10p | 7% |
| Distribution & transport | ~5p | 4% |
| Retail margin | ~10p | 7% |
| Fuel duty | 52.95p | 39% |
| VAT (20% on full 135p) | 22.5p | 17% |
| Total | 135p | 100% |
Tax total: 52.95p + 22.5p = 75.45p, representing 55.9% of the pump price.
Note: VAT is calculated on the entire pump price including duty — this is why VAT on fuel is sometimes described as "a tax on a tax."
The Fuel Duty Freeze: Timeline
| Date | Event | Rate |
|---|---|---|
| Pre-March 2022 | Standard rate | 57.95p/litre |
| 23 March 2022 | Spring Statement — 5p temporary cut | 52.95p/litre |
| November 2022 | Autumn Statement — freeze extended | 52.95p/litre |
| March 2023 | Spring Budget — freeze extended | 52.95p/litre |
| October 2024 | Autumn Budget — freeze extended | 52.95p/litre |
| March 2026 | Spring Statement — freeze extended again | 52.95p/litre |
The original March 2022 cut was explicitly described as "temporary" — yet has been extended at every subsequent fiscal event. The freeze has now been in place for four years and is effectively the de facto rate.
The 5p saving in context: At 10,000 miles per year in a 40 mpg car (1,136 litres), the 5p cut saves £56.80/year before VAT, or £68.16/year including VAT relief (since lower duty also means lower VAT). This is real but modest — roughly £1.30/week.
Your Annual Fuel Costs at Different Efficiencies
At a pump price of 135p/litre:
| Annual mileage | Fuel efficiency (MPG) | Litres used | Annual fuel cost | Of which: tax |
|---|---|---|---|---|
| 5,000 miles | 30 mpg | 757 litres | £1,022 | ~£571 |
| 10,000 miles | 30 mpg | 1,514 litres | £2,044 | ~£1,143 |
| 10,000 miles | 40 mpg | 1,136 litres | £1,534 | ~£858 |
| 10,000 miles | 50 mpg | 909 litres | £1,227 | ~£686 |
| 15,000 miles | 40 mpg | 1,705 litres | £2,302 | ~£1,289 |
| 20,000 miles | 40 mpg | 2,273 litres | £3,069 | ~£1,717 |
Tax = 56% of pump price. MPG figures are UK gallons (4.546L), not US gallons.
Why Do Diesel and Petrol Cost Different Amounts at the Pump?
Fuel duty is identical for petrol and diesel (52.95p/litre). The pump price difference (diesel is typically 2–5p/litre more expensive) reflects:
- Higher refining cost for ultra-low sulphur diesel (ULSD)
- Global diesel demand: diesel is heavily used in trucks and freight globally, keeping wholesale prices higher
- Seasonality: diesel prices spike more in winter due to heating oil demand
Red Diesel: The Duty Exemption for Off-Road Use
Red diesel (gas oil) carries a reduced duty rate of 11.14p/litre — available for qualifying agricultural, horticultural, fish farming, and some industrial uses. The red dye makes it distinguishable from standard diesel. Using red diesel in a road vehicle is illegal and carries significant penalties (fines, vehicle seizure, criminal charges).
In April 2022, the eligibility for red diesel was significantly restricted — most construction equipment, commercial refrigerators, and leisure boats lost access. Farmers and agricultural users retained access.
Electric Vehicles: No Fuel Duty, But Road Pricing Ahead
EVs pay no fuel duty — one of their major economic advantages in running costs. This represents a significant and growing shortfall in government revenue as EV adoption rises.
The OBR (Office for Budget Responsibility) and HM Treasury have both signalled that road pricing (pay-per-mile charging) is under active consideration as a long-term replacement for fuel duty revenue. No confirmed UK road pricing scheme exists as of 2025/26, but several local and city-level schemes (London ULEZ, Clean Air Zones) already apply charges to higher-emission vehicles.
Fuel Duty vs Other UK Fuel Taxes
| Tax | Rate | Applied to |
|---|---|---|
| Fuel duty | 52.95p/litre | Per litre at source |
| VAT | 20% | On total pump price |
| ULEZ daily charge | £12.50/day | Older petrol/diesel vehicles in London |
| CAZ charges (various cities) | £8–£50/day | Varies by city and vehicle type |
| Company car fuel benefit | BIK on fuel scale charge | Company-provided fuel for personal use |
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