Fuel duty freeze is welcome but cost of fuel could rise again
Andrew Thurston · March 11th 2024 · read
In his Spring Budget, the Chancellor announced that the temporary 5p reduction on Fuel Duty would be extended until March 2025. This continues the reduced Fuel Duty at 52.95p per litre.
It was also announced that the current fuel duty rates would be frozen for a further 12 months.
These announcements are welcome news as the price of fuel appears to have stagnated around £1.50 per litre. With the increasing uncertainty in the Middle East, the cost of fuel could easily rise again so the 5p reduction remains a topical relief although it is difficult to see if the consumers have benefitted from the 5p reduction with the prices continually fluctuating.
The hope is that this will help with the impact of UK transport costs within the supply chain, further reducing the cost of goods to the consumer.
The example below provides an overview of the estimated savings of the 5p reduction for an average Heavy Goods Vehicle. As you can see, the savings appear minimal but, for a refuel each day over a 12-month period (365 days), the temporary relief equates to £24,159.35 per HGV. These figures show the potential effect on supply chain costs that this relief provides.
| SCANIA - R580 | ||
|---|---|---|
| Fuel Tank Capacity (ltrs): | 1250 | |
| Cost of fuel on 30/12/22* | £1.49.7 | |
| Cost of fuel on 06/03/24* | £1.52.6 | |
| Cost to fill up (Dec '22) | £1,871 | |
| Cost to fill up (now) | £1,907.5 | |
| Difference: | £36.50 | +1.9% |
| Fuel Duty (57.95ppl) | £724.38 | |
| Temporary 5p Duty relief saving | £66.19 | |
| VAT saving on fuel relief | £13.23 | |
| Total reductions | £79.42 |
*Figures for fuel prices taken from RAC (https://www.rac.co.uk/drive/advice/fuel-watch/).
For further guidance
For further guidance on any of the tax measures discussed in this article, please contact your usual MHA advisor or Contact Us.
Read the latest Spring Budget commentary from MHA – visit our dedicated hub for resources, advice and practical guidance on what the new tax measures could mean for you.
