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UK fuel duty cut by 5p per litre

UK fuel duty cut by 5p per litre

The government has announced that fuel duty on petrol and diesel will be reduced by 5p per litre throughout the UK for one year, beginning at 6 p.m. on March 23, 2022. 

In the UK government’s spring statement 2022, Chancellor Rishi Sunak stated, “Today I can announce for only the second time in 20 years, fuel duty will be cut. Not by 1, not even by 2, but by 5 pence per litre. The biggest cut to all fuel duty rates – ever.” 

“Together with the freeze, it’s a tax cut this year for hard-working families and businesses worth over £5 billion. And it will take effect from 6pm tonight.” he continued. 

According to the RAC’s Fuel Watch, the latest average price for petrol is 167.03p per litre and diesel is roughly 178.97p. 

In response to the Chancellor’s statement this afternoon, RAC head of policy Nicholas Lyes stated: “With petrol and diesel prices breaking records almost daily, and the cost to fill up a petrol car at over £92 and a diesel at nearly £100, we’re pleased to see the Chancellor has given drivers some much-needed relief at the pumps, but the reality is that a 5p cut in duty is something of a drop in the ocean. 

“In reality, reducing it by 5p will only take prices back to where they were just over a week ago.” 

“With the cut taking effect at 6pm tonight drivers will only notice the difference at the pumps once retailers have bought new fuel in at the lower rate.” 

“There’s also a very real risk retailers could just absorb some or all of the duty cut themselves by not lowering their prices. If this proves to be the case it will be dire for drivers. It also wouldn’t be totally unexpected based on the biggest retailers not reducing their prices late last year when the oil price fell sharply. 

“Temporarily reducing VAT would have been a more progressive way of helping drivers as the tax is applied at the point the fuel is sold.” 

“It’s also the case that the Treasury is benefitting hugely from the high fuel prices because of greater VAT revenue. The Chancellor is currently getting 28p a litre VAT on petrol and 30p on diesel – this of course comes on top of fuel duty as VAT is a tax on a tax.” 

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