UK extends 5p fuel duty cut to end of year

The government said it will extend the 5p cut on fuel duty to the end of the year instead of phasing it out in September.

The reduced tax rate for petrol and diesel was introduced by the previous Conservative government after Russia's full-scale invasion of Ukraine pushed prices up in 2022.

The price of petrol and diesel has risen significantly since the start of the US-Israel war in Iran, which has affected global supplies of oil and liquified natural gas.

Downing Street said the fuel duty freeze would cost £455m for the current tax year. The prime minister's official spokesman said the government had been able to freeze duty because of better economic growth figures.

Fuel duty was initially cut by 5p in the Spring Statement in March 2022 under the Conservative government. It was supposed to last 12 months but has been repeatedly extended.

The average price of petrol hit its highest level since the start of the Iran war on Monday, reaching 158.52p a litre, according to the RAC.

Starmer also announced plans to cut the fuel duty rate on red diesel by over a third, to 6.48p per litre from the middle of next month until the end of the year. That is expected to help farmers who use it in their tractors and other agricultural machinery.

He also announced a 12-month holiday on vehicle excise duty for HGVs, which the government said would help with the higher supply chain costs affecting the haulage industry that can impact consumer prices.

"Will drivers be hit with the full 5p in one go in the spring, will a new phasing be agreed, or will the government even abandon an increase altogether?" he said.