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Chancellor Jeremy Hunt announced fuel duty will be frozen for another year when he announced the Spring Budget 2024 this afternoon.
The tax on petrol and diesel was cut by 5p as a temporary measure in 2022, but the government extended this in last year’s budget.
It means motorists will continue paying 52.95p per litre of petrol and diesel at fuel pumps.
Hunt announced the continuation of the 5p fuel duty cut when he laid out the government’s annual budget in a speech before the House of Commons at 12.30pm.
The announcement means a rise / fall in the rate of tax paid on fuels including petrol and diesel.
He said: ‘Lots of families and sole traders depend on their car. If I did nothing fuel duty would increase by 13% this month.
‘I have decided to maintain the 5p cut and freeze duty for another 12 months.
‘This will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £200.’
The measure will save £22 for the country’s lowest earners, while the wealthiest in society, who tend to own more cars, will save £60 a year for the wealthiest in society, according to analysis by Social Market Foundation (SMF) thinktank.
Until the 5p cut in 2022, fuel duty had stayed at at 57.95 since 2011 when a freeze was introduced as a temporary measure.
This reduced the tax intake by £100 billion in that time, the SMF said.
A continuation of this freeze will cost the Treasury another £5 billion in potential revenue each year, the think tank estimated.
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Chancellor of the Exchequer Jeremy Hunt poses with the red Budget Box as he leaves 11 Downing Street in central London on March 6, 2024, to present the government’s annual budget to Parliament (Picture: Justin Tallis / AFP)
The chancellor was under pressure to extend the 5p fuel duty cut for another year in a bid to suppress rising prices and keep a bit more money in people’s pockets.
High fuel costs have made keeping a car on the road increasingly expensive.
Although the price per litre has fallen from a high of 191.43p for petrol and 199.05p for diesel in July 2022, the cost remains considerably higher than a low point in February 2016.
Prices were 87% higher for petrol and 97% higher for diesel, according to analysis of data from the RAC Foundation, a transport policy and research organisation
Changes in taxation can make a significant difference to the price drivers pay at the petrol pump.
Road transport industry leaders including the AA and Logistics UK called on the government to maintain a 5p per litre cut to fuel duty introduced in 2022 when Prime Minister Rishi Sunak was Chancellor.
The temporary measure was introduced after Russia’s full-scale invasion of Ukraine sent global oil prices soaring.
It brought the rate of fuel duty for petrol, diesel, biodiesel and bioethanol down to 52.95p per litre, which is where it remains.
Other fuels including liquefied petroleum gas, natural gases like biogas, and fuel oil used in furnaces and heating are taxed at different rates.
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