UK fuel duty rise postponed: 5p/litre hike set to be cancelled again

The temporary fuel duty cut, introduced in 2022, was scheduled to expire in September, which would have added 5p per litre to pump prices for petrol and diesel. According to reporting by the Sun, the Chancellor is set to extend the freeze for at least another year, continuing a pattern of deferrals that has now run across multiple budgets.

The fiscal cost is significant. HM Treasury collected £24 billion in fuel duty in the last financial year, and the Office for Budget Responsibility noted in March that a sustained policy of not raising fuel duty could produce an annual tax shortfall of £3.6 billion in the coming years. Its forecasts currently assume the increase goes ahead, meaning a further freeze would require the government to find offsetting savings or revise its fiscal projections.

What this means for UK commercial energy and fleet buyers

Brent over the last six months shows the crude backdrop against which any duty freeze must be read.

For businesses with material road transport exposure, a confirmed freeze caps one direct cost line for another year. The picture is complicated, however, by the wider oil market. Global crude prices have risen approximately 60% since late February, driven by geopolitical escalation, which means pump prices remain elevated in absolute terms regardless of duty policy.

Key figures and decision points to track:

• Fuel duty rate (currently frozen at 52.95p/litre for petrol and diesel)
• Planned September 2025 increase (5p/litre, now expected to be deferred)
• OBR-projected annual shortfall from a sustained freeze (£3.6 billion)
• Global crude price trajectory (up approximately 60% since late February)
• UK 10-year gilt yield (at highest since 2008 as of last Friday, tightening the fiscal headroom that makes any freeze affordable)

For fleet managers and procurement leads pricing multi-year transport contracts, the duty freeze, if confirmed, removes one upside risk from September onwards. It does not offset crude-driven pump price inflation, which remains the dominant variable in fuel cost modelling for 2025-26.

The formal announcement is expected at next week's fiscal statement. Watch for whether Reeves couples the freeze with any change to the OBR's baseline assumptions, which would signal how the government intends to account for the £3.6 billion annual revenue gap in future spending rounds.