The 5p fuel duty cut will be maintained in a move that the government says will save drivers £50 next year, contributing to a total of £250 since the cut was introduced in March 2022.
Since then, the Chancellor has kept the 5p cut, and Jeremy Hunt said it will be a tax cut worth £3.1bn over 2024/25. As well as the freeze, the planned inflation increase for the next tax year will also be scrapped.
The government noted in its Budget document: “It represents around £13bn of support over the three years from the cut being introduced and is worth around £50 for the average car driver in 2024/25.”
Fuel duty currently stands at 52.95p, after its first 5p reduction in its Spring Statement 2022 from 57.95p.
Motoring services including the AA and RAC have welcomed the freeze following their calls for the government to do so, but the rising price of petrol has tempered enthusiasm behind the policy.
Fuel duty decision ‘quietly passed to next government’
RAC head of policy Simon Williams, said: “With a General Election looming, it would have been a huge surprise for the Chancellor to tamper with the political hot potato that is fuel duty in today’s Budget. It appears the decision of if or when duty will be put back up again has been quietly passed to the next government.
“But, while it’s good news that fuel duty has been kept low, it’s unlikely drivers will be breathing a collective sigh of relief as we don’t believe they’ve fully benefitted from the cut that was introduced just two years ago due to retailers upping margins to cover their ‘increased costs’. This has meant fuel prices have been higher than they would otherwise have been.”
Williams added: “What’s more, despite today’s positive news, it’s still the case that drivers are once again enduring rising prices at the pumps, sparked by the oil price going up – the average cost of a litre is already up by more than 4p since the start of the year.”
Alcohol duty
The Chancellor also said that he would freeze alcohol duty, which, along with the fuel announcement, will help lower inflation by 0.2 percentage points, he claimed.
Hunt announced in the Autumn Statement 2023 that he had “listened to defenders of the great British pint” and froze alcohol duty until 1 August 2024. That duty freeze will be extended to 1 February 2025, and the decision aims to “support the hospitality sector and help consumers with the cost of living.”
CAMRA Chairman Nik Antona believes the Budget was “a missed opportunity to show backing for the Great British pub” and says the government ought to have slashed tax on draught beer and cider served in pubs.
Antona said: “However, freezing alcohol duty until February 2024 will be welcomed by consumers and breweries, helping mitigate an additional hike in costs to be passed on to pubs and pub-goers.
“Making duty on draught beer and cider significantly lower would promote drinking in the regulated setting of a community local and help small and independent producers who sell mainly into pubs and taprooms to compete against the global brewing giants and the likes of supermarket alcohol.”
Vaping and tobacco
As predicted in YourMoney.com’s Budget rumour round-up this week, there will be a new levy brought in for vapes, kicking off in October 2026.
The government’s Budget document confirmed the rates will be £1.00 per 10ml for nicotine-free liquids, £2.00 per 10ml on liquids that contain 0.1-10.9mg nicotine per 1ml, and £3.00 per 10ml on liquids that contain 11mg or more per 1ml.
Alongside the new tax on vaping, a one-off increase will hit tobacco duty in October 2026 too, priced at £2.00 per 100 cigarettes (or 50g of tobacco).
