Chancellor Rachel Reeves has declared that fuel duty will be frozen next year, a decision which will cost the Treasury over £3 billion.
During her Budget speech to the Commons, Ms Reeves described this as a "substantial commitment", asserting that increasing taxes on fuel would be "the wrong choice for working people".
This implies that the 5p per litre reduction in fuel duty, introduced by the Conservative government in March 2022, will persist. Prior to the 5p reduction, fuel duty had been held at 57.95p per litre since March 2011.
VAT is applied at 20% on top of the total fuel price. Ms Reeves stated: "To retain the 5p cut and to freeze fuel duty again would cost over £3 billion next year."
She added: "At a time when the fiscal position is so difficult, I have to be frank with the House that this is a substantial commitment to make."
She concluded: "I have concluded that in these difficult circumstances while the cost of living remains high and with a backdrop of global uncertainty increasing fuel duty next year would be the wrong choice for working people."
She further explained: "It would mean fuel duty rising by 7p per litre. So, I have today decided to freeze fuel duty next year and I will maintain the existing 5p cut for another year, too."
She assured: "There will be no higher taxes at the petrol pumps next year."
Government data indicates that the average cost of a litre of petrol and diesel at º£½ÇÊÓƵ forecourts is approximately £1.34 and £1.40 respectively.
