The Government has extended the 5p cut to fuel duty until the end of 2026, delaying the planned phase-out that was expected to take place this September.

This is the latest in a continuous line of 'temporary' cuts or freezes to fuel duty dating back to the start of the coalition government over a decade ago - suggesting once imposed, such actions prove politically difficult to remove.

There has been no increase in the fuel duty rates of unleaded petrol and diesel since 2011, and while industry has been broadly supportive, active travel campaigners among others have bemoaned the huge cost to the Treasury.

Fuel duty raised £24.3bn last year, and the Treasury has estimated the cost of the 5p cut was worth about £2.4bn. In 2024, the Financial Times reported that 'including the cost of a 5p cut on fuel duty introduced in the 2022 Budget, [the fuel duty freeze] has cost £90bn in lost revenues since 2011, according to the OBR'.

First introduced by the previous government in response to increased fuel prices driven by the conflict between Russia and Ukraine, the 5p cut was initially only intended to last 12 months but has been extended multiple times.

The most recent extension has been necessitated by ‘events in the Middle East', Prime Minister Keir Starmer said.

Speaking to the House of Commons, the Prime Minister said that the Government was ‘backing drivers by extending the freeze on fuel duty' and added that there are plans to reduce the fuel duty rate on red diesel by over a third, to 6.48p per litre from the middle of next month until the end of the year. 

These announcements were also accompanied by a 12-month ‘holiday' on vehicle excise duty for heavy goods vehicles (HGVs) in an attempt to manage the higher supply chain costs impacting haulage companies.

RAC head of policy, Simon Williams. said: ‘Drivers are struggling with the cost of filling up, especially now petrol has reached an Iran War high of 158.73p a litre, so the decision to keep the 5p fuel duty in place for the time being is very welcome. 

‘The Prime Minister's announcement that duty won't go up this year means a penny won't go back on in September, followed by a further 2p in December. The big question is now: what will happen next year and will drivers be hit with the full 5p in one go in the spring, will a new phasing be agreed, or will the Government even abandon an increase altogether?'