Budget 2025: fuel duty up 5p in staged rise
03/12/2025

The Chancellor has confirmed the long-running freeze on fuel duty is finally coming to an end – but not all at once.

The good news (for now)

The current 5p-per-litre cut, originally due to end in April 2026, has been extended by another five months and will stay in place until 1 September 2026. That keeps an extra £3+ in your pocket every time you fill a typical 55-litre tank compared to what you’d pay without the discount.

The less good news

From September 2026 the 5p reduction will be removed in three stages:

• 1 September 2026 → +1p per litre
• 1 December 2026 → +2p per litre
• 1 March 2027 → +2p per litre

By April 2027 the full 5p cut is gone and fuel duty returns to its pre-March 2022 level.

After that, the old “fuel duty escalator” comes back: duty will rise every year in line with RPI inflation (usually higher than CPI).

How much will it cost the Treasury – and you?

• Keeping the cut until September 2026 costs the government £45 million.
• Phasing it out and restarting inflation-linked rises is forecast to raise an extra £2.4 billion in 2026-27, then around £900 million a year on average after that.

What drivers are saying

Simon Williams, RAC head of policy, summed it up: “Drivers will be relieved the 5p cut is staying for now – it saves more than £3 a tank. But this relief will be very short-lived given the staggered increases starting next September.”

He also pointed out that even without the 5p discount, pump prices are still higher than before Russia’s invasion of Ukraine in 2022.

The new Fuel Finder tool

The government is launching an official “Fuel Finder” scheme that promises real-time price comparison at forecourts across the UK. Many drivers already use commercial apps and websites that do exactly the same thing, so the real impact remains to be seen.

The bottom line

After 16 years of frozen or reduced fuel duty (despite repeated net-zero promises to increase it), the era of cheap-ish fuel tax is over. The rises are being brought in gradually, but by spring 2027 every motorist will be paying noticeably more at the pump – and even more in the years that follow as inflation-linked increases return.

Start budgeting now: the days of fuel duty standing still are ending.