Chancellor protects drivers and businesses from rising fuel costs

Britain's motorists and businesses will get help with rising prices at the pumps with a targeted package to keep taxes down and support people with the impact of war in Iran.

The Government has announced, the 5p cut on fuel duty will be extended for the rest of the year. In total, by the end of this year the cut will have saved the average driver £120 since 2025. This ensures fuel duty on petrol and diesel remains at its lowest rate for over 16 years. 

The conflict has also pushed up costs for hauliers who keep Britain's shelves stocked and its economy moving. The Chancellor is giving them a 12-month road tax holiday – meaning they will pay £1 at renewal, saving £600 for a typical heavy lorry and £912 for the biggest vehicles on the road. Farmers, rail freight, and other red diesel users will also see their fuel duty cut by over a third until the end of the year.

This is the lowest rate in over 20 years, helping to keep the cost of doing business down at a difficult time when red diesel prices are around 50% more than their pre-crisis levels. Since the start of the Iran conflict, the government has been clear that it will not make kneejerk decisions that could impact on financial stability. The package of support brought forward is timely and targeted.   

Prime Minister Keir Starmer said: “I know many are feeling the pressure of energy and fuel costs and are worried about how the conflict in Iran will affect their finances. Because when global events drive up prices, it’s working people who feel it first. 

"That’s why this government is stepping in to keep fuel costs down for millions of drivers and putting money back in the pockets of working people.” Chancellor of the Exchequer Rachel Reeves said: "I’m keeping taxes down for drivers and businesses – putting money in the pockets of millions of workers and cutting costs for farmers and hauliers.  

“The war in Iran is pushing up fuel prices here at home but after strong growth at the beginning of the year, I am stepping in to protect people at the pump. By protecting households and businesses we are building a stronger and more secure economy for Britain. That is the right economic plan.” 

NB:

• The 5p cut to fuel duty will be extended to 31 December. It was due to gradually unwind from 1 September.  
• The fuel duty rate on red diesel will also be cut by over a third from 10.18p to 6.48p per litre from 15 June until the end of the year. This will support agriculture, rail freight, and other users of red diesel and rebated fuels. 
• Recognising the importance of the haulage sector to supply chains and on consumer prices, we are going further supporting hauliers through a holiday for their HGV VED for 12 months. This means when hauliers renew their HVG VED they will pay just one pound, saving £600 for a typical heavy lorry and £912 for the HGVs with the highest VED liability.   
• Farmers, rail freight, and other red diesel users will also see their fuel duty cut by over a third from 10.18p to 6.48p per litre until the end of the year.