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Boost for millions of motorists as 5p cut to fuel duty for petrol and diesel comes into effect.

• Car drivers to save around £50 this year and £250 since the 5p cut was introduced – a £13 billion tax cut for motorists.
• Follows further tax cuts for working people announced at Spring Budget, rewarding work, boosting growth and helping families with the cost of living.

Millions of drivers across the UK will continue to be supported at the pumps as of Saturday 23 March as the extension to the temporary 5p fuel duty cut for petrol and diesel came into effect – putting yet more money in people’s pockets.

The Chancellor Jeremy Hunt announced the 12-month extension at the Spring Budget, as well as cancelling the planned inflation increase for 2024/25, saving car drivers around £50 this year and £250 since the 5p cut was introduced – a £13 billion tax cut for motorists overall over three years.

The temporary cut was first introduced in March 2022 to combat high fuel prices after global supply chain issues following the pandemic, as well as Russia’s invasion of Ukraine. The recent extension takes effect as the government continues to support motorists with rising costs.

Taken with recent cuts to National Insurance Contributions – to the tune of around £1800 per household - this is putting even more money in people’s pockets. This is only possible because the government stuck to its plan to boost the economy. The economy has now turned a corner and 2024 is set to be the year that Britain bounces back.

In the past year, inflation has more than halved; the economy has recovered more quickly from the pandemic than first thought; and debt is on track to fall. The government is sticking to the plan to deliver the long-term change our country needs to deliver a brighter future for Britain.

Chancellor for the Exchequer Jeremy Hunt recently said:

Cutting people’s tax bill, while protecting our public services, is a priority. We’re already saving drivers £50 a year and the average earner £900 a year – and if we stick to our plan, we will go even further, rewarding work and growing our economy.

Energy Security Secretary Claire Coutinho recently said:

We will always stand by UK drivers and today’s fuel duty cut is just one of the ways we are keeping costs down for families. Our plans for a new Pumpwatch will make sure motorists are getting a fair price at the pump.

To mark the extension coming into effect, the Financial Secretary to the Treasury Nigel Huddleston visited an Asda petrol station in Worcestershire where he met staff and saw the supermarket chain’s more fuel-efficient fleet of vans.

Financial Secretary to the Treasury Nigel Huddleston recently said:

The last few years have been tough but we’re making real progress – which is why we are able to continue to support motorists for another 12 months.

By cutting taxes for working families and sticking to the plan, we can keep building a stronger economy and a brighter future where hard work is rewarded.

RAC head of policy Simon Williams recently said:

The Government’s decision to extend the 5p duty cut is certainly a help to cash-strapped drivers, particularly as this week wholesale fuel prices have risen on the back of a higher oil price.

With the creation of Pumpwatch and a price monitoring body on the horizon, there should soon be more pressure than ever on retailers to price fuel fairly, which will ensure it is only drivers who benefit from the duty cut.

The government’s support on fuel duty is already available for longer than in many countries including Germany, France, and the Netherlands. A large proportion of countries which lowered fuel duty rates after the energy crisis have now ended their support.

The existing duty rates on road fuel gases, which are lower than the equivalent rates on diesel, will also continue to 2032, giving the haulage industry greater certainty over future tax rates and supports the decarbonisation of the UK transport sector.

The recent extension to the 5p cut follows more tax cuts for working people announced at the Spring Budget, putting over £900 a year back into the average worker’s pocket thanks to changes at Autumn Statement and a second Employee National Insurance tax cut from 10% to 8% in April. The Chancellor has also committed to abolishing National Insurance altogether – end the unfairness of a double tax on work.

Meanwhile pubs, breweries and distilleries will benefit from a further freeze to alcohol duty until February 2025 – which will also save consumers money on their favourite tipple. The six-month alcohol duty freeze announced at Autumn Statement will be extended until 1 February 2025, benefitting 38,000 pubs across the UK, while reducing inflation this year.

The recent news follows the government’s ongoing work to make sure drivers are getting a fair price at the pump by improving competition in the road fuel market.

Proposals for a new Pumpwatch scheme announced earlier this year will see the UK’s 41.2 million drivers get the latest petrol station prices at the click of a button, transforming how the UK shops for its fuel. Under the plans, all fuel stations would be legally required to share live information on their pump prices within 30 minutes of any change in price subject to the outcome of the government’s consultation.

This freely available data will enable tech companies to develop new ways for drivers to search for the cheapest fuel while on-the-go and access to this price comparison technology could see drivers save 3p per litre on fuel, while also helping to drive down prices by reigniting competition.

Further information

• Photos of the visit can be found on the HM Treasury Flickr account here.
• The Department for Energy Security and Net Zero’s consultation on the Pumpwatch scheme closed on 12 March 2024. The government is reviewing responses and will publish a response in due course. 
• Last year, the government also appointed the Competition and Markets Authority as the body responsible for monitoring the road fuel market, to increase transparency and competition in fuel pricing. The watchdog will also shine a light on any attempt from retailers to overcharge drivers, advising government on any further action required to make competition work well.