What's Changing
The 5p a litre cut in fuel duty has been extended again. Chancellor John Healey announced it in his Budget speech, and the Budget 2026 document sets out the detail.
The cut was due to end with 2026. The government has cancelled its plan to add 5p back in January 2027 and extended the cut by six months, to 1 July 2027. It has also put back the planned rise in line with inflation (the Retail Prices Index, or RPI) to the same date.
So for now, duty on both petrol and diesel stays at 52.95p a litre. The 3.7p cut on red diesel is extended to 1 July 2027 too. The Budget says fuel duty is as low as it's been at any point for over 16 years.
When It Starts And Who It Affects
The current cut runs to the end of 2026. The extension covers 1 January 2027 to 30 June 2027. The government says it's going to introduce the law to make that happen, so for now the extension is announced but not yet law.
From 1 July 2027, fuel duty is set to go back to the level it was at before the cut began in March 2022, plus an RPI rise. The Budget's rates table puts that at 60.59p a litre for petrol and diesel. That's 7.64p more than now, not just the 5p.
The government says the cut gives temporary breathing space to 35 million motorists and businesses across the UK. It expects its fuel duty decisions across this Parliament to have saved the average car driver £230, the average van (light goods) driver £472 and the average HGV driver nearly £4,000.
When Does Fuel Duty Go Up?
Fuel duty on petrol and diesel after Budget 2026.
- 28 October 2026
Budget 2026
The 5p cut is extended to 1 July 2027 and the January 2027 rise is cancelled.
- To 31 December 2026
Current Cut
Duty stays at 52.95p a litre under the existing cut.
- 1 January to 30 June 2027
Extended Cut
Duty stays at 52.95p a litre, once the law for the extension is passed.
- Spring 2027
Cheaper Local Charging
£100 million over two years starts cutting prices at lower-powered public chargers.
- 1 July 2027
Duty Rises
Back to the pre-March 2022 level plus RPI: 60.59p a litre, up 7.64p.
From GOV.UK's Budget 2026 document and its rates table (Annex A), checked 30 October 2026. The extension is announced, with legislation to follow.
There's help for electric car drivers too. From spring 2027, the government plans to spend £100 million over two years cutting the cost of charging at lower-powered public charge points near people's homes. The Budget expects it to save around £150 a year for an EV driver without home charging who charges on the street.
What It Means For Your Car Insurance
The Budget's fuel and charging announcements don't say anything about car insurance, so if you're wondering whether anything changes for you, ask your insurer.
Where it can matter is how you use the car. If the duty cut means you drive more than the yearly mileage on your policy, or you start using your own car for work, check your policy still matches how you drive.
The Budget also makes a change for people who use their own car or van for work. The tax-free mileage rate of 55p a mile for the first 10,000 business miles, announced as temporary in May, is now permanent. The rate above 10,000 business miles goes up from 25p to 35p a mile from 6 April 2027. Whether your policy lets you drive for work is a separate question, and it's covered in car insurance for business use.
What To Do Now
- Check your mileage. If you expect to drive more or fewer miles than your policy shows, tell your insurer or ask whether it matters. Here's more on whether annual mileage affects car insurance.
- Check your class of use. If you claim mileage for work trips in your own car, ask your insurer whether your policy includes business use.
- Plan for July 2027. Duty on petrol and diesel is set to rise to 60.59p a litre from 1 July 2027.
- Charge on the street? Look out for lower prices at local public chargers from spring 2027.
You can compare car insurance quotes when you're ready.
FAQs
How Long Has The 5p Fuel Duty Cut Been Extended For?
Until 1 July 2027. Budget 2026 extends the cut by six months from the end of 2026, keeping duty at 52.95p a litre on petrol and diesel. The government still has to bring in the law for the extension.
How Much Does Fuel Duty Rise In July 2027?
By 7.64p a litre, not 5p. On 1 July 2027 duty is set to go back to its pre-March 2022 level plus an RPI rise. The Budget's rates table shows petrol and diesel going from 52.95p to 60.59p a litre.
Does The Fuel Duty Cut Change My Car Insurance?
Not that the Budget says. Its fuel announcements don't mention car insurance. If you drive more miles than your policy shows, or start using your car for work, check your cover still matches and ask your insurer if you're not sure.
