Chancellor Jeremy Hunt has announced in his Spring Budget that a fuel duty cut will remain in place for the next 12 months.
Jeremy Hunt has been under pressure from backbench Tory MPs to keep the fuel duty cut in place after the freeze was due to come to an end this month. Now the continued halt on fuel duty means drivers have been spared a potential price rise of 12 pence per litre, after the tax had previously been predicted to rise by 23%.
Graham Conway, managing director at Select Car Leasing, has welcomed the continued freeze on fuel duty, saying any large rise could have tipped many motorists over the ‘precipice’.
He said:
“We wholly welcome the Chancellor’s announcement on fuel duty in today’s Budget, with the duty now frozen until March 2024.
“The poorest families, as well as businesses operating a fleet of vehicles, would be hit the hardest by any rise in the price of fuel.
“And for many people who are really feeling the effects of the cost of living crisis, such a price hike could have tipped them over the precipice in terms of their own budget."
Fuel duty is a tax levied on petrol, diesel and other fuels by the Government. And since 2011, fuel duty has actually been frozen at 57.95p per litre.
In March last year, then-Chancellor Rishi Sunak slashed fuel duty by an additional 5p a litre, a temporary measure taking it down to 52.95p per litre in a bid to ease the pressure on motorists amid sky-high petrol and diesel prices.
Together, those two factors mean that until March 2024, fuel duty will stay at 52.95p.
Select's Mr Conway adds:
"The Chancellor’s decision to extend the cut to fuel duty will come as extremely welcome news to motorists and businesses across the UK that rely on traditionally-fuelled vehicles for their essential travel.
“It’s interesting to note that the continued freeze on fuel duty actually goes against what some experts were forecasting. In November last year, the Office for Budget Responsibility (OBR) predicted a 23% rise in fuel duty, which would have increased the price of petrol and diesel by around 12p per litre.
“The extension to the cut means financial relief for millions of drivers.
“Because while petrol and diesel prices have dropped from the all-time high prices of the summer of 2022, they’re still a huge burden for many families and companies."
The fuel duty freeze may only be a brief reprieve.
The price of fuel is influenced by a variety of factors, including global oil prices and geopolitical events, which are outside the control of the UK government. Whilst fuel prices have dropped around 45 pence since July 2022, drivers are still paying much more than they were in 2021.
And if you are worried about spiralling fuel prices, it's worth considering switching to a fully electric vehicle (EV).
If you're still not convinced of the benefits, check out our Select Car Leasing fuel cost calculator, which shows you the relative financial impact of running a petrol or diesel car vs an EV over the course of a year.
When you factor in current fuel prices and the cost of electricity, a typical motorist could save an estimated £832* annually when behind the wheel of an EV rather than a traditionally-fuelled car or van.
If you have any questions about electric vehicle leasing, get in touch with one of the specialists in our dedicated Select Electric division, and read some of the advice on our electric guides pages.
*The calculations are based on the annual mileage you choose above and the following assumptions: a litre of fuel costs £1.57; your petrol/diesel car has an average efficiency of 39.5 mpg; you charge your electric car at home at 34p per kWh; your electric car has an average efficiency of 3.5 miles per kWh.
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