Fuel duty rates

fuel duty uk

Fuel Excise Duty (FED) is a UK fuel tax that is added to the price of fuel before it is sold. The duty applies to all hydrocarbon based fuels including petrol, diesel, biodiesel, and liquefied petroleum gas (LPG) that is sold for use by vehicles licensed for road use in the UK.

Fuel duty – 2011 to 2017

The duty rates quoted are for the period up to 2018/19 as announced in the Autumn Budget 2017.

UK fuel duty is currently 58p per litre for petrol and diesel. Vehicle fuels with a lower impact on carbon emissions or air quality are taxed at lower duty rates; these include liquefied petroleum gas (LPG), compressed natural gas (CNG) and electricity.

Other than fuel duty, the forecourt price of a litre of fuel also includes the product cost (around 30p per litre), Value Added Tax (in the region of 20-25p per litre depending on price) and the retailers margin (often only 5p per litre or less).

As announced in the Autumn Budget 2017, fuel duty has been frozxen until the end of the 2018/19 financial year. This cancelled the planned increase, and means that fuel duty will have been frozen for at least eight years - the longest freeze for more than 40 years. Fuel duty therefore remains at 57.95 pence per litre until further notice.

UK Fuel Excise Duty rates

Fuel type (used as road fuel) Fuel duty
(23 Mar 2011 – March 2019)
Ultra-Low Sulphur Petrol 57.95 p/litre
Ultra-Low Sulphur Diesel 57.95 p/litre
Biodiesel 57.95 p/litre
Bioethanol 57.95 p/litre
Liquefied petroleum gas 31.6 p/kg
Natural gas 24.7 p/kg
Electricity Zero

Sources: HM Treasury, Jan 2018.

Fuel duty – Proportion of pump price and future trends

For petrol and diesel, fuel duty currently accounts for around 50% of the price at the pump (including VAT which is levied on the duty).

Historically, fuel duty has been used both to raise general government revenues, and also (to a lesser extent) manage the level of car and van use for environmental reasons.

As has been widely covered in the media, UK fuel tax is high by international standards rising steadily over the last 15 years. Between 1993 and 1999 there was a rapid increase with fuel duty increasing by 3% above inflation under the 'Fuel duty escalator’ designed to generate revenues and discourage people from using their cars.

However, due to the economic downturn, a 'Fair fuel duty stabiliser' was introduced in 2011 to control fuel costs by avoiding automatic increases in fuel duty as long as oil prices remain high, with any increase only permitted when, and if, oil prices fall. Revenues lost by the introduction of the stabiliser are balanced by increasing tax on North Sea oil revenues.

It was predicted that the Chancellor would add a penny per litre to the price of fuel duty for petrol and diesel in the Budget 2016 announcements. However, this didn't materialise and has continued to be absent from Budget announcements, with the confirmation that the fuel duty freeze would continue at least 2019.

Chris Lilly

Author:Chris Lilly
Date Updated:3rd Jan 2018

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