Fuel duty to increase for first time since April 2010
- Fuel duty is set to increase for the first time in 16 years, with the current 5p per litre cut extended only until September 2026 before being reversed through a staggered approach.
- From April 2027, the Government plans to increase fuel duty rates annually in line with the Retail Price Index (RPI) measure of inflation.
- To address declining fuel duty revenue from the shift to electric vehicles (EVs), a new 3p per mile tax will be introduced for battery electric cars from April 2028.
- Motoring groups, including the AA and RAC, welcomed the short-term extension of the fuel duty cut but warned drivers of impending hikes and criticised the new EV tax.
- The OBR predicts the new EV tax will reduce electric car sales by around 440,000, with industry experts describing the government's EV transition strategy as 'muddled and confusing'.