Could UK Fuel Duty Rise in 2021?

With Chancellor of the Exchequer Rishi Sunak currently in talks with the cabinet to raise petrol prices, industry analysts are warning motorists could be hit with a fuel duty hike of 5p by March 2021. Currently, fuel duty is incorporated into the price of all petrol and diesel sold in the UK and sits at 57.95 pence per litre. The duty has been frozen for the past 10 years, however, to cover the expenses of the COVID-19 pandemic an increase could be looming.

If the 10-year freeze is lifted, millions of motorists across the UK could be facing a 5p price increase. Set to be announced in the Autumn Budget, the increase could arrive just as lockdown restrictions are easing and Brits are starting to return to work and engage in recreational travel.

Chancellor moves to fill public finances gap

Fuel duty isn’t the only levy on the agenda, with rumours the Treasury is also considering tax hikes of up to £20 billion to recoup the enormous economic costs of the coronavirus pandemic. Currently, Britain is recording public debt of more than 2 trillion pounds, an eye-watering amount pushed even higher by emergency spending on COVID-19 schemes like business tax cuts, job retention payments and the controversial eating-out subsidy.

Downing Street opposes tax hikes

The prospect of a fuel duty increase has garnered fierce criticism from some politicians, with Senior Tory MP Robert Halfon warning “Now is not the time to clobber workers, families, white van men and women and our public services with a fuel duty increase.” At a time when the nation is rallying to rebuild the economy, critics say raising the cost of fuel is counterproductive and will place additional stress on British workers.

Despite the financial benefits, Downing Street has openly opposed the tax increases proposed by the Chancellor, instead encouraging Sunak to focus on capital gains and corporation taxes. Howard Cox, founder of  industry-funded lobby group FairFuelUK agrees, saying “The highest-taxed motorists in the world will be seething with injustice if they are used as fall guys for the recent taxpayer-funded cheap Eat Out scheme and £2 billion of new cycle lanes.”

As well as fuel levy hikes, British motorists will also be facing a phase out of petrol and diesel vehicles over the coming decade. To find out more about the advent of EVs don’t miss ‘The need for dedicated lubricants following heightened demand for electric vehicles.’