The chancellor has announced in the Budget that the fuel duty will remain frozen for five months after April 2026, followed by a staged increase from the following September, reports Peter Brown.
The Treasury intends to reverse the 5p fuel duty cut starting in late 2026, with annual increases from April 2027 onward tied to the Retail Prices Index.
Fuel duty has been unchanged since 2011—a policy the Office for Budget Responsibility estimates has cost the Exchequer £120 billion in lost revenue.
Responding to the Budget, Logistics UK acting chief executive Kevin Green said ‘instead of nurturing the green shoots of economic recovery, the government risks stamping them out’.
He continued: “The increase in fuel duty announced in the Budget will mean hundreds of millions in increased taxes for logistics businesses, much of which will be passed onto households and businesses, as well as hitting motorists directly – fuelling inflation across the economy.
“It is a short-sighted decision that fails to appreciate logistics’ role in the economy – logistics costs are embedded in all products from food and medicines to construction materials and consumer goods: increasing logistics taxes mean increased costs for everyone.”
RHA managing director Richard Smith said: “The Chancellor’s decision to reverse the 5p cut on fuel duty after September 2026 and the increase of fuel duty rates by inflation from April 2027 will be a hammer blow for many businesses and push up the cost of living for families across the country.
“Whilst we welcome today’s decision to initially continue the freeze until next September, as independent economic research shows – a 5p rise in fuel duty would increase household costs by £2bn annually, pushing up the price of everyday essentials.
“Future fuel duty increases now loom large for families struggling with the cost of living and for the many small businesses who keep our supply chains moving.”
CIHT – the Chartered Institution of Highways and Transportation – welcomed the Budget. Sue Percy CBE, CIHT chief executive, said: “Transport has again emerged as a key theme and we welcome the government’s acknowledgement that prioritising investment in the highways, transportation and infrastructure sector enables significant wider economic, societal and health benefits.”
“CIHT looks forward to continuing to work with the Treasury, the Department for Transport, and the government on the creation of transport networks that are fit for all our futures.”
Howard Cox, founder of FairFuelUK.com, said months of lobbying in the lead up to the Budget seems to have paid off and added that: “It would be churlish not to thank the Chancellor for listening in her second Budget to her own MPs, who have received thousands of calls from their FairFuelUK supporting constituents to keep this regressive tax frozen.”
However, he feared that the 3p pay-per-mile (PPM) on EVs is ‘the thin end of the wedge’.
Critically, electric vans are exempt from the new mileage-based tax for electric vehicles to be introduced from 2028, something welcomed by the CEO of Aegis Energy Michael Shaw.
“With commercial transport responsible for around 10% of the UK’s total emissions, any additional tax burden could have discouraged businesses from investing in cleaner vehicles at a time when confidence is critical,” he added.
