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 2017 as announced in Budget 2016.

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).

In Budgets 2013 and 2014, the Government cancelled the planned fuel duty increase that were scheduled for September 2013 and 2014 respectively. The Chancellor continued the freeze on fuel duty in Budget 2016 such that fuel duty will now remain unchanged until at least 2017.

UK Fuel Excise Duty rates – all figures quoted to 1 decimal place

Fuel type (used as road fuel) Fuel duty
(Jan 2011 – 22 Mar 2011)
Fuel duty
(23 Mar 2011 – Sept 2017)
Ultra-Low Sulphur Petrol 59.0 p/litre 58.0 p/litre
Ultra-Low Sulphur Diesel 59.0 p/litre 58.0 p/litre
Biodiesel 59.0 p/litre 58.0 p/litre
Bioethanol 59.0 p/litre 58.0 p/litre
Liquefied petroleum gas 33.0 p/kg 31.6 p/kg
Natural gas 26.2 p/kg 24.7 p/kg
Electricity Zero Zero

Sources: Autumn Statement 2012, Budgets 2013–2016.

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, with the confirmation that the fuel duty freeze would continue at least until the next budget in 2017.

Source: Budget 2016

Peter Thomas

Author:Peter Thomas
Date Updated:10th Mar 2015

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