Fuel duty freeze extended until at least the end of 2026
The 5p cut to fuel duty won’t be unwound in September, as had previously been announced
The UK government is extending the fuel duty freeze until at least the end of 2026, which should provide cash-strapped drivers with some relief as petrol and diesel prices continue to rise.
The 5p cut on fuel duty was introduced in March 2022 by the previous Conservative government to alleviate pressure on drivers following the start of the Russo-Ukraine war. However, the Iran war has resulted in drivers having to spend more at the pumps.
Chancellor Rachel Reeves had announced the fuel duty freeze would begin to be phased out from September 2026, reducing it to 4p per litre. From December it would shrink further to 2p, with the discount being removed altogether the following March. This decision was met with fierce criticism from the opposition.
It would have only added to the pain of already-high petrol costs in light of the war in Iran. At the time of writing, RAC Fuel Watch says the average price of petrol is now 158.73p per litre, which is the highest it’s been since the start of the conflict. Meanwhile, the average price of diesel currently stands at 185.73p a litre – only slightly down from a high of 191.54p in mid-April.
Speaking about the continued fuel duty freeze and other measures announced today, Prime Minister Keir Starmer said: “I know many are feeling the pressure of energy and fuel costs, and are worried about how the conflict in Iran will affect their finances. Because when global events drive up prices, it’s working people who feel it first.
“That’s why this government is stepping in to keep fuel costs down for millions of drivers and putting money back in the pockets of working people.”
Reeves added: “The war in Iran is pushing up fuel prices here at home, but after strong growth at the beginning of the year, I am stepping in to protect people at the pump.”
According to the Home Office, by the end of this year the freeze on fuel duty will have saved the average driver approximately £120 in total since 2025.
The cut to fuel duty remains temporary, of course. It’s likely Reeves will recommence the process of unwinding the discount in next March’s Spring Statement. Furthermore, the following month, fuel duty is set to begin its annual inflationary rise – in this case, by 2p per litre.
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