The Budget on Wednesday 28 October is the last scheduled chance for the government to decide what happens to fuel duty before the 5p cut runs out. Duty is currently 52.95p a litre. Unless the Chancellor changes the plan, 3p goes back on from 1 January 2027 and a further 2p from 1 March. Once VAT is added, that is about 6p a litre at the pump, or £3.30 more every time you fill a 55-litre tank.
It comes at the worst possible moment for drivers. The government's weekly figures for the week of 12 October put diesel at 200.04p a litre and petrol at 175.28p — both slightly higher than the week before. Diesel set an all-time record of 200.01p on the RAC's daily measure on 2 October.
Live on PetrolPrices.co.uk right now
- Average diesel across the stations we track: 199.1p — 0.9p below £2
- Forecourts charging £2 or more for diesel: 1,914 (24.0% of stations reporting diesel)
- Average petrol (E10): 174.1p
- Cheapest diesel in the UK: 158.7p, dearest: 234.9p
Updated 21 Oct 2026, 00:02 from the government Fuel Finder feed. Refreshes every 15 minutes.
Why pump prices haven't come down
Earlier this month the AA reported that wholesale diesel had fallen by 6p to 8p a litre, and we looked at how much of that should reach the pump. So far very little has. The government's weekly diesel average was higher in the week of 12 October than the week before.
Since then, the oil market has turned against drivers again. Iran has stepped up attacks on tankers in the Strait of Hormuz, with 15 attacks recorded between 6 and 14 October, and Brent crude touched $110 a barrel on 16 October for the first time since May. It has since eased to around $108, but that is still higher than when the wholesale falls happened, which narrows the room for cuts. How quickly cuts should normally reach forecourts is explained in how quickly should petrol prices fall?
The options on the table
These are the main choices being discussed ahead of the Budget, with what each would mean for a 55-litre tank. Figures include VAT and assume any change is passed on in full at the pump.
| Option | Who wants it | At the pump | 55-litre tank |
|---|---|---|---|
| Let the 5p cut end as planned (3p in January, 2p in March) | The current default | About +6p a litre | +£3.30 |
| Keep the 5p cut beyond December | AA, RAC and others | No change from today | Avoids the £3.30 rise |
| Keep the 5p cut and add a further 5p | AA | About −6p a litre | −£3.30 (£6.60 better than letting it end) |
| An extra 10p cut | FairFuelUK | About −12p a litre | −£6.60 |
| Cut VAT on fuel — for example, from 20% to 15% | RAC (as an alternative) | About −8p diesel, −7p petrol | About −£4.58 diesel, −£4.02 petrol |
The VAT row is our own illustration, based on the government's weekly averages for 12 October. No specific VAT rate has been proposed.
Why a 5p duty cut is worth 6p at the pump
VAT is charged at 20% on the whole price of fuel, including the duty. So every 1p of duty becomes 1.2p at the pump. At 200.04p a litre, tax makes up about 86p of every litre of diesel — 52.95p in duty and about 33.3p in VAT. More in how much fuel is taxed in the UK.
The case for a cut: the VAT windfall
Because VAT is a percentage, the Treasury collects more every time pump prices rise. Bloomberg estimates the government could take about £3.9bn more in fuel VAT over the next 12 months than if prices had stayed near pre-war levels. The RAC puts the extra collected since the conflict began on 28 February at about £1.27bn, although businesses can reclaim some of it.
The motoring groups argue that this extra money should pay for relief. The RAC says the government should use its “extremely high” VAT receipts to help motorists, and the AA has asked the Chancellor to take the additional revenue into account when he costs a cut.
The case against: the public finances
Cuts are expensive. Extending the existing 5p freeze into 2027 alone would cost more than £2bn, according to Bloomberg's estimate. Prime Minister Andy Burnham has said “every possible measure” is being considered, but has also signalled there is little room for giveaways. The Chancellor has said he is “concerned” about the pressure on drivers at the pumps, and that any decisions will be made in the Budget rather than before it.
That leaves the outcome genuinely open. We first set out the timetable in Budget 28 October: the fuel duty decision, and looked at the bigger cut in what a 10p fuel duty cut would actually save you.
23 March 2022
The temporary 5p fuel duty cut is introduced.
28 February 2026
The US–Iran conflict begins. Diesel averages 142.38p.
2 October 2026
Diesel hits an all-time high of 200.01p on the RAC's daily measure.
Wednesday 28 October 2026
John Healey's first Budget — the decision on fuel duty.
1 January 2027
3p of the cut comes off, unless the Budget changes it.
1 March 2027
The remaining 2p comes off, taking duty back to 57.95p.
A duty cut doesn't guarantee lower prices
Any cut announced in the Budget only helps if retailers pass it on. The competition watchdog has already found some retailers slow to pass on falls in their costs — see retailers slow to pass on fuel savings. Whatever happens on 28 October, the price at the forecourt you choose will matter more than the national average.
What you can do before the Budget
Nothing changes on Budget day itself unless the Chancellor announces an immediate cut, so there is no reason to fill up early or hold off. What makes the biggest difference is where you buy — see why petrol prices differ in the same town.
Four quick ways to pay less
- Check before you set off. We cover over 8,000 stations from the government Fuel Finder feed, updated every 15 minutes.
- Use the fuel price map to compare the stations around you — supermarkets are usually the cheapest.
- Save your regular stations in favourites to see at a glance which one is cheapest today.
- Work out what a trip will really cost with the journey cost calculator, and use the journey planner to find the best-value stop on your route.
Weekly averages are from the government's road fuel price statistics for the week commencing 12 October 2026. Record and pre-conflict prices are from RAC Fuel Watch. Tank figures are based on a 55-litre tank and assume changes are passed on in full. Live figures come from the government Fuel Finder feed and refresh every 15 minutes.