Fuel Duty will not rise next year, after Chancellor Rachel Reeves announced she would maintain the freeze on the tax.
Fuel Duty is tax that affects anyone looking to purchase fuel for their car as well as people wanting to heat their home.
It has not risen in more than a decade, and was frozen between 2012 and 2022, before being cut by 5p in March 2022 when pump prices surged following Russia’s invasion of Ukraine.
Rachel Reeves said it would be the “wrong choice” to increase fuel duty next year, saying she would continue the freeze and maintain the temporary 5p cut for another year.
She told MPs she has to “take some very difficult decisions” on tax, and noted to retain the 5p cut and freeze fuel duty again would cost more than £3 billion next year.
The Chancellor said: “At a time when the fiscal position is so difficult, I have to be frank with the House that this is a substantial commitment to make.
“I have concluded that in these difficult circumstances while the cost of living remains high and with a backdrop of global uncertainty increasing fuel duty next year would be the wrong choice for working people.
“It would mean fuel duty rising by 7p per litre. So, I have today decided to freeze fuel duty next year and I will maintain the existing 5p cut for another year, too. There will be no higher taxes at the petrol pumps next year.”
Speaking last month, the AA highlighted the impact Fuel Duty has on motorists.
AA president Edmund King said: “Pure and simple, the only reason why pump prices are nearly at a three-year low this week is because of the 5p fuel duty cut.
“Removing it threatens to send millions of low-income drivers back into the era of perma-high road fuel prices.
“Getting rid of the fuel duty cut unleashes a £3.30 a tank shock on the personal and family budgets of the 28% of drivers who spend a set amount when they go to a fuel station.
“That is more than nine million private motorists – most of whom are low-income and struggling to balance their budgets.”
Opening the Budget this afternoon, Reeves said: “On July 4, the country voted for change. This government was given a mandate. To restore stability to our country and to begin a decade of national renewal.
“To fix the foundations and deliver change through responsible leadership in the national interest. That is our task. And I know we can achieve it.”
She said her “belief in Britain burns brighter than ever” but “the only way to drive economic growth is to invest, invest, invest”.
“There are no shortcuts. And to deliver that investment we must restore economic stability and turn the page on the last 14 years.”
What is Fuel Duty and how does it work?
Fuel Duty is a tax levied on the purchases of petrol, diesel and any other fuel sources intended for vehicles and heating.
According to the Office for Budget Responsibility, this represents a "significant source of revenue" for the Treasury with it raising around £25 billion in 2023 and 2024.
Fuel Duty is taxed per unit of fuel with the rate paid by those in the UK depending on the fuel type.
