Fuel Duty (UK)

Fuel duty is set by HM Treasury and announced in each Autumn Statement or Budget. It was frozen at 57.95p per litre from 2011 until March 2022, when it was cut by 5p to 52.95p as a response to the cost-of-living crisis — the largest cash cut in 15 years. That cut has been extended repeatedly rather than reversed.

To understand what you're actually paying for, a typical litre of petrol at 145p breaks down roughly as: fuel duty 52.95p + VAT (20% on the whole pump price) 24.17p = 77.12p in tax + approximately 37–40p in wholesale product cost, transport, and retailer margin. In other words, over 50% of every petrol purchase goes to the Treasury.

Fuel duty is the same per litre regardless of where you buy — supermarket, motorway services, or branded forecourt. This means the entire pump price difference between stations is in the remaining ~38% (wholesale cost, delivery, and margin). A 5p/litre difference between stations is therefore a large relative saving on the non-duty portion — but it needs to be weighed against the cost of getting there.

Electric vehicles do not pay fuel duty. As EV adoption grows, the government will need to replace this revenue — road pricing and EV-specific taxes are widely expected in the late 2020s.