Financeupdated 57m ago3 min read
Archive photo · 8 January 2025John Healey Extends Fuel Duty Freeze With 5p Cut Until July
5 Other4 Western MainstreamPhoto: U.S. Secretary of Defense / US federal government, Public domain · Cropped for layout
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Fuel duty remains at 52.95p per litre through July 2027. Temporary 5p per litre fuel duty cut extended to July 2027.
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Fuel duty freeze extended
Chancellor John Healey extended the freeze on fuel duty rates, maintaining the five-pence temporary cut introduced in 2022 until at least July, and he said, "With the war in the Middle East still driving high fuel prices, I am extending these tax cuts for motorists through the winter and spring to July." Duty paid on motor fuels has been frozen since 2011, except for the temporary cut introduced in 2022, and fuel duty brings in around £25 billion ($33 billion) a year. Carwow said the Autumn Budget extended the 5p-per-litre fuel duty cut until July 2027, while it also stated that fuel duty has been frozen at 52.95p per litre since 2022.
Autocar said Healey maintained the 5p-per-litre reduction on fuel duty until July 2027 and that the total duty on fuel would be held at 52.95p per litre. Fleet News said Healey told MPs that, "With the war in the Middle East driving high fuel prices, I'm extending these tax cuts for motorists through the winter and spring to July."
Energy payments and VAT
Chancellor John Healey announced a £100 energy payment for 20 million households in council tax bands A to D, and The Guardian said the payment would be funded by a smaller than expected windfall tax on banks. The Guardian quoted Healey saying, "I know that with the conflict in the Middle East, rising energy bills are a real worry." The BBC said Healey unveiled his first Budget and announced £100 energy payment for millions, while it also described how people on a range of incomes reacted to the Budget.
RAC said the VAT cut on household electricity, which came into effect on 1 October, was extended until July 2027 and that the Chancellor claimed it would take £50 off the annual energy price cap. The Independent said Healey announced that the cut to VAT on electricity will be extended to July, taking £50 off the annual price cap, and it also said he announced a £100 household energy payment to people in council tax bands A to D.
Motoring costs and reactions
Opposition leader Kemi Badenoch said she was "glad to see" fuel duty temporarily frozen but questioned why it could not be maintained at that rate for longer. Edmund King, president of motoring body the AA, argued the duty freeze "only delays the price shock" when it is increased. Dave Herbert, a professional driver who moves cars between showrooms and does deliveries, said fuel prices have been "crazy" this year and that he spends around £350 a month on petrol for work and personal use.
Carwow said the Budget made the 55p-per-mile tax-free mileage rate for the first 10,000 business miles permanent and raised the rate for additional business miles from 25p to 35p per mile. The Guardian said Healey extended the VAT cut on electricity bills until next July and cancelled fuel duty rises pencilled in by Rachel Reeves, while it also quoted Healey saying, "For millions of people, the cost of living and the cost of doing business are the same."