Expected Fuel Duty Increase Will See Fuel Costs Rise - Autumn Budget 2024
At the end of October 2024, the Chancellor, Rachel Reeves, will be announcing the Autumn Budget. It has been predicted that there will be a fuel duty increase in order to compensate for the large financial blackhole the Labour government have discussed. It is estimated that the Fuel Duty will increase by 7p.
Fuel Duty is a tax levied on fuel and built into the costs you pay as a driver at the pump. The current rate is 52.95p per litre. This means that for every litre of fuel you pay for, which is approximately £1.35 p/litre (E10 petrol) 52.95p goes to the government in tax. At the current rate, this provides the Exchequer with approximately £25bn per year. In 2022, then Chancellor Rishi Sunak announced a 5p reduction in fuel duty to help motorists as fuel costs rising following the Russian invasion of Ukraine. This 5p reduction is currently frozen until March 2025, but it is predicted that the new Labour government will end this freeze in the Autumn Budget in order to increase taxes to cover this alleged blackhole.
As this is only applied to fuel, this will not impact drivers of electric cars. It is predicted that the shortfall in tax revenue generated by the fuel duty will start to decrease as more drivers make the switch to electric cars, thus not needing to purchase fuel.
Cost of Living Crisis - an extra £175 per year
Costs are rising in all aspects of life at the moment. One of the biggest fears if this prediction is to come true is that it will worsen the cost of living crisis for people. Paul Barker, who is the editor of Auto Express, has expressed deep concerns on the impact on cost of living if fuel duty is to increase. He stated that it would be a "major blow" to people already struggling with growing costs. He went further, by stating that "the average car [needs] refuelling every eight days, this would increase cost of each fill-up by nearly £4 - around £175 per year in extra fuel expenses".
This is a significant and hard increase to swallow. It comes at a time when many people would have noticed that fuel prices are actually dropping. It has been somewhat refreshing to see the price at the pump decreasing and slightly easing the financial pressure.
Increase ALL Costs
Fuel duty rising will not just see the price at the pump increase. Fuel prices have a direct impact on all goods and services; naturally overheads will increase for all businesses that rely on fuel. This ranges from retail, supermarkets, delivery services etc. As their costs rise, so do their prices. Whilst there are no official estimations on how much this increase could actually cost an individual, it is likely to be a lot higher than £175 per year.
We will have to wait and see whether the car industry will be delivered another brutal blow during already difficult times. Pendle Lease always stay up to date with the latest automotive news that affects drivers, so keep checking in for all the latest news. If you don't fancy paying the increased fuel duty and would like to make the switch to electric vehicles, check out our recent blog on the Top 5 Electric Cars to Lease Now!
