Key takeaways
- There's no fuel duty rise in January 2027. Budget 2026 cancelled that step on 28 October and held duty at 52.95p a litre until 30 June 2027.
- Duty on petrol and diesel is legislated to reach 60.59p a litre on 1 July 2027. That's 7.64p more, or 9.17p once VAT at 20% is added on top.
- At 12,000 miles a year the step adds £116.86 to a 1401cc to 2000cc petrol car and £136.65 to a diesel over 2000cc, on HMRC's own fuel economy figures.
- Deferring the increase costs the Exchequer £575 million in 2026 to 2027 and £780 million in 2027 to 2028, and nothing in any later year.
- The 5p cut has been extended five times since March 2022. Duty has sat at 52.95p every week since the week commencing 28 March 2022.
What the fuel duty rise costs a tank and a year
You came here for one number: what the fuel duty rise does to your own bill. Here's the short version. Nothing happens in January 2027, because Budget 2026 cancelled the fuel duty step that was due then. Duty on unleaded petrol and on diesel stays at 52.95p a litre until 30 June 2027. On 1 July 2027 it's legislated to go to 60.59p.
That's a step of 7.64p a litre of duty. VAT at 20% is charged on the duty-inclusive price, so the duty increase carries its own VAT with it. Pass the whole thing through to the forecourt and it adds 9.17p to every litre. On a 55 litre fill, which is this piece's assumption and not a published figure, that's £5.04.
The annual number depends on how much fuel you burn, and that depends on your car. HMRC publishes mean miles-per-gallon figures of its own to set the advisory fuel rates it gives company-car drivers, taken from "manufacturers' information, taking into account annual sales to businesses". Those are the bands below, converted at the imperial gallon of 4.54609 litres fixed by Schedule 1 to the Weights and Measures Act 1985.
| Car | HMRC mean mpg | Extra a year at 8,000 miles | Extra a year at 12,000 miles |
|---|---|---|---|
| Petrol up to 1400cc | 50.7 | £65.76 | £98.65 |
| Petrol 1401cc to 2000cc | 42.8 | £77.90 | £116.86 |
| Petrol over 2000cc | 27.2 | £122.58 | £183.88 |
| Diesel up to 1600cc | 55.7 | £59.86 | £89.79 |
| Diesel 1601cc to 2000cc | 49.6 | £67.22 | £100.84 |
| Diesel over 2000cc | 36.6 | £91.10 | £136.65 |
Those are increases, not the whole duty bill. The mid-size petrol car in the second row burns 1,274.6 litres over 12,000 miles. It hands over £674.90 of duty at today's rate and £772.28 at the July 2027 rate. The chart plots the right-hand column, which is the part of that bill that's new.
Both mileage figures sit above the typical English car. The National Travel Survey put average annual car mileage at 7,100 miles in 2025, from an unweighted sample of 11,918 cars. Petrol cars managed 6,200 miles and diesels 8,000. So the 8,000-mile column is roughly the average diesel, and 12,000 miles is a heavy private user or a long commuter.
The January step was cancelled, and the March step went with it
This question is confusing because the schedule has been rewritten three times in 2026 alone. Each rewrite was published as a policy paper that looked final.
In February, HMRC said rates would rise "1 ppl on 1 September 2026 2 ppl on 1 December 2026 2 ppl on 1 March 2027". In May it replaced that with 52.95p to 31 December 2026, then 55.95p from 1 January 2027 and 57.95p from 1 March 2027. The same paper added that "the government will confirm final rates at Budget 2026". None of those steps happened, and none of them now stands.
What the Budget actually did sits in measure 2.18 of the Overview of tax legislation and rates. The government "will introduce legislation to extend the temporary 5 pence per litre (ppl) cut in the main rates of fuel duty (originally introduced at Spring Statement 2022) from 1 January 2027 until 30 June 2027". The Budget document says it in plainer words. It is "cancelling plans to add 5p back onto fuel duty from January 2027 and is extending the cut by a further six months to 1 July 2027".
So a fuel duty increase anywhere in the UK is off the table this winter. One larger step replaces it, six months later.
Where the 60.59p rate comes from
The 60.59p figure isn't in the Budget speech. It's in Annex A of the tax legislation overview, in a column headed "Rates from 1 July 2027", against both "Unleaded petrol" and "Heavy oil (diesel)".
Two things stack on that one date. The main rate of fuel duty before March 2022 was 57.95p, and HMRC describes the 2022 measure as "a proportionate percentage cut (equivalent to 5 ppl from the main fuel duty rate of 57.95 ppl)". On 1 July 2027, the measure says, fuel duty rates "will return to the levels that applied before the 5 ppl temporary cut was introduced in March 2022, and will be uprated in line with the Retail Prices Index (RPI)".
Reverse the cut and you're back at 57.95p. The published 60.59p is 2.64p above that, an uprating of 4.6%. The Treasury hasn't published the inflation assumption behind it, so that percentage is inference from the two rates rather than a stated figure. After this, the costing document says, "From 1 April 2028, fuel duty rates will be uprated annually in line with RPI".
Duty is nearly a third of what you pay, and VAT sits on top of it
In the week commencing 26 October 2026 the average pump price was 174.07p a litre for unleaded petrol and 199.22p for diesel. Duty of 52.95p was 30.4% of the petrol price. Add the VAT and tax of both kinds came to 47.1% of what a driver handed over.
That second number is why the duty step and the pump step differ. VAT is charged on the price including duty, so every extra penny of duty brings a fifth of a penny of VAT behind it. The 7.64p rise and the 9.17p pump effect are the same event measured before and after that.
It also marks the limit of what anyone can promise you. Duty is a legislated number and the pump price isn't. In the week commencing 21 March 2022 petrol averaged 165.37p with duty at 57.95p. A week later duty was 52.95p and the average price was 162.65p. The 5p cut showed up roughly, and the rest of the move was the market.
What the six-month deferral is worth, and to whom
The Budget scorecard prices it. Extending the cut and deferring the inflation increase costs £575 million in 2026 to 2027 and £780 million in 2027 to 2028, then nothing in any year after. That nothing matters: the forecast assumes the July 2027 rise lands, and that it's never deferred again.
The Treasury's per-driver figures are smaller than most readers expect. HMRC put the saving from the May 2026 schedule at "£49 in 2026 to 2027 compared to previous plans". Across the whole Parliament, the Budget claims the decisions on duty "have saved the average car driver £230, the average light goods driver £472". The Treasury frames the latest extension as "breathing space to the 35 million motorists and businesses across the UK".
For scale on the other side of the ledger, the Office for Budget Responsibility expected fuel duties to raise "£24 billion" in 2025 to 2026, "equivalent to £835 per household and 0.8 per cent of national income". That forecast was written at the November 2025 Economic and fiscal outlook, before any of this year's changes, so read it as the size of the tax rather than as a current number.
Red diesel and business drivers move on different timetables
Red diesel keeps its separate treatment. The legislation extends "the further 3.7 ppl cut to the rebated rates for gas oil (red diesel), biodiesel, bioblend and kerosene for excepted machines other than for heating, until 30 June 2027". Annex A has the rebated rate at £0.0648 a litre now and £0.1165 from 1 July 2027. That's a step of 5.17p rather than 7.64p, because the pre-cut rebated rate is being uprated too.
People who drive their own car for work got something that runs the other way. The 55p per mile tax-free rate for the first 10,000 business miles was made permanent at this Budget, and the rate above 10,000 miles goes from 25p to 35p. The Treasury puts that at "£120 a year in additional tax savings if they drive 6,000 business miles", rising to "£300 in additional tax savings from both upratings" at 15,000 business miles. Set against the table above, that more than offsets the duty step for a business driver and does nothing at all for a commuter.
Electric drivers sit outside all of this for now, and have their own charge coming instead. The pay per mile electric car tax starts in April 2028 at 3p a mile, which is the comparison the Treasury used to justify it.
The strongest case that July 2027 doesn't happen either
Here's the objection to treating any July figure as settled, and it's a good one. This rise has been scheduled and unscheduled repeatedly. The Budget document says the 2022 cut "has since been extended five times, including in May of this year". HMRC's February paper notes it was "extended for a further 12 months at fiscal events in 2023, 2024 and 2025 and was due to expire on 22 March 2026".
The weekly price series makes the point without needing any interpretation. Duty on petrol was 57.95p in the week commencing 1 January 2018, the first week the series covers. It was 52.95p by the week commencing 28 March 2022, and it hasn't moved since.
The OBR is blunter about that pattern than the Treasury is. Its fuel duties page says: "The Government states that fuel duty will be uprated by RPI inflation in the future, but has not done so in the past decade." The Budget's own framing is that "Fuel duty is as low now as it has been at any point for over 16 years." A rise that has slipped at every fiscal event for a decade isn't a forecast you'd stake a household budget on, and the zeroes on the scorecard after 2027 to 2028 are the Treasury assuming otherwise.
There's a counter to the counter-argument, and it's the date. Every previous deferral pushed the step past a fiscal event. This one lands on 1 July 2027, in the middle of a financial year, with inflation uprating written into the same measure and annual uprating from April 2028 behind it. That's a harder thing to roll quietly forward than a March expiry.
What these numbers cannot tell you
Three limits, and they all push the same way.
The fuel economy figures are HMRC's, drawn from manufacturers' data weighted by business sales. Real-world consumption is generally worse than a test figure. A car doing 35 mpg rather than 42.8 burns more litres and pays more of the increase, so the table understates the bill for anyone whose car is older, heavier or driven in traffic.
The arithmetic also assumes the duty increase reaches the pump in full. That's a convention, not a measurement, and the March 2022 week above shows duty changes and price changes aren't the same thing. Nothing here is a pump-price forecast.
And the mileage is yours. The 8,000 and 12,000 figures are brackets, not predictions about you. The per-litre numbers are the ones that transfer: 7.64p of duty, 9.17p including VAT, on every litre bought after 1 July 2027. Multiply by your own litres and the rest of the table is scaffolding. If you track running costs alongside everything else, annual mileage is the input worth keeping current, and what Budget 2026 means for me sets this beside the other measures from the same day.
What would change the conclusion
The first thing to watch is the legislation itself. Measure 2.18 says only that the government "will introduce legislation", and rates like these move by statutory instrument rather than through a Finance Bill. HMRC's February paper spells the mechanism out: "Secondary legislation will be introduced to adjust the liability to duties in sections 6 to 8 and the rebates in sections 11, 13AA, 13ZA, 14,14A and 14B" of the Hydrocarbon Oil Duties Act 1979. Until that instrument is laid, 60.59p is an announcement, and the May 2026 paper is a worked example of a published schedule being replaced before it ever took effect.
The second is the inflation print that sets the uprating. The 60.59p rate is a specific number, but the mechanism behind it is uprating "in line with the Retail Prices Index (RPI)", and annual uprating restarts from 1 April 2028. If inflation runs hotter than whatever assumption sits inside 60.59p, the 2028 step is larger than today's fuel duty rates suggest.
The third would genuinely overturn this piece: another deferral at the next fiscal event. If the cut is extended a sixth time, every figure in the table goes to zero for another six or twelve months, and the Exchequer gives up something close to the £780 million it has already booked for 2027 to 2028. That's the outcome a decade of precedent points at, and the one the Treasury's own forecast rules out.
What none of this settles is the longer problem behind it. Fuel duty receipts fall as the fleet electrifies whatever the rate does, which is why the per-mile charge exists, and why the cost of financing a car is increasingly the part of motoring costs that doesn't depend on which fuel you buy.