Spring Budget 2023: Chancellor confirms extension of fuel duty cut

In his Budget, the Chancellor confirmed the reduction that was introduced in March 2022 will continue for another 12 months.

Hunt also confirmed fuel duty is not going to increase in line with inflation.

The average driver will save £100 over the next 12 months, Mr Hunt said.

Jeremy Hunt announced the Budget on Wednesday (Image: Stefan Rousseau/PA Wire)

At UK forecourts, the average cost of a litre of petrol and diesel is around £1.47 and £1.67 respectively, Government figures show.

In July last year, prices reached record highs of £1.92 for petrol and £1.99 for diesel largely due to Russia’s invasion of Ukraine leading to an increase in the cost of oil.

AA head of roads policy Jack Cousens said: “We are pleased the Chancellor has listened to the AA and frozen fuel duty.

“Not only will this save drivers heavy duty pain at the pump, but it will help keep the price of goods and services down as they are mainly transported by road.”

Fuel duty rate will (as always happens) be frozen including the 5p cut introduced last. #Budget2023

As will duty on a pint.

— Martin Lewis (@MartinSLewis) March 15, 2023

RAC head of roads policy Nicholas Lyes said: “We welcome the Government’s decision to keep the 5p fuel duty cut in place for another 12 months.

“The cut has given drivers some much-needed relief in what has been the most torrid year ever at the pumps, with price records being broken even after duty was cut.

“Given the importance of driving for consumers and businesses, duty should be kept low to help fight inflation.”

As a result of Jeremy Hunt extending the reduction, fuel duty will remain 52.95p per litre for petrol and duty.

Before it was cut last year, it had been frozen at 57.95p since March 2011.

On top of the total price, VAT is charged at 20%.

Tax makes up around half of pump prices, RAC Foundation analysis shows.

What is fuel duty?

Graham Conway, managing director at Select Car Leasing, welcomes the extended freeze on fuel duty and explained what fuel duty is.

He said: “Fuel duty is a tax levied on petrol, diesel and other fuels by the Government.”

Conway also discussed what this means for motorists: “The extension to the cut means financial relief for millions of drivers. 

“Because while petrol and diesel prices have dropped from the all-time high prices of the summer of 2022, they’re still a huge burden for many families and companies. 

“It’s worth noting that while the continued fuel duty freeze can provide some short-term relief for drivers, it may only be a brief reprieve. 

“The price of fuel is influenced by a variety of factors, including global oil prices and geopolitical events, which are outside the control of the UK government. Whilst fuel prices have dropped around 45 pence since July 2022, drivers are still paying much more than they were in 2021.”