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. The duty rates quoted are for the period up to 2019/20 as announced in the Budget 2018.

Fuel duty – 2011 to 2020

UK fuel duty is currently 57.95 pence per litre for petrol and diesel. Vehicle fuels with a lower emissions impact 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 Budget 2018, fuel duty has been frozen until the end of the 2019/20 financial year. This means that fuel duty will have been frozen for at least nine years; the longest freeze for more than 40 years. Fuel duties therefore remain at current rates until further notice.

UK Fuel Excise Duty rates – March 2011 to March 2020

Fuel type (used as road fuel) Fuel duty
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 31.61 p/kg
Natural gas 24.7 p/kg
Electricity 0.0 p/kWh

Source: HM Treasury, October 2018

Fuel duty – Recent history 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.

Since Budget 2016, when an expected 1p per litre increase in petrol and diesel fuel duty failed to materialise, fuel duty has continued to be absent from Budget announcements, with the confirmation in 2018 that the fuel duty freeze would continue at least 2020.

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Chris Lilly

Author:Chris Lilly
Date Updated:30th Oct 2018

Latest car tax news