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Update

Sir Kier Starmer has opened the door to a rise in fuel duty in the Autumn Budget set for Wednesday 30th October

See our briefing on the Autumn Budget 2024. That includes an update released on 10th August 2024. Briefing

Acknowledgement: Daily Telegraph

Update: 240912
Posted: 240829

Oil prices at lowest level since 2021 - but will motorists benefit?	The recent easing in pump costs may encourage the the Chancellor to reverse the last government's 5p-a-litre fuel duty cut, with little obvious pain, in the looming Autumn Budget. A slump in crude oil prices could lead to further reductions at the fuel pumps but any benefit risks being stripped away next month as the Chancellor of Exchequer seeks ways to bolster the public finances. A barrel of Brent crude, the international benchmark, slipped below US$70 for the first time since December 2021 on Tuesday afternoon. Chart Fuel price report from PetrolPrices.com alongside. Prices are at a welcome low level. www.petrolprices.com
	The headline feature in the DailyTelegraph today says "fuel duty could be next in tax grab". It reports "Sir Kier Starmer has opened the door to a rise in fuel duty in the Autumn Budget set for Wednesday 30th October. Despite his pledge not to increase taxes on working people, the Prime Minister suggested an increase in the fuel duty, paid by millions of motorists in the UK, was on the table". That would reverse a 14-year period under the Conservatives with no fuel duty increases. The levy stands at 52.95p a litre after a temporary reduction of 5p was brought in by Rishi Sunak in March 2022 when he was chancellor in the wake of the invasion of Ukraine. This level of fuel duty was maintained in subsequent Conservative budgets.
End of the fuel duty freeze? The fuel duty freeze could now be vulnerable to the new Chancellor's need to raise money. "When asked if he acknowledged that a rise in fuel duty would be a tax on working people, and whether he would reject it, he told reporters yesterday: "Well look. Firstly, we made very clear pledges before the election in relation to tax on working people. You heard it a number of times in relation to income tax, VAT and National Insurance and we absolutely stick to that - beyond that I am not going to speculate about the (forthcoming) Budget."" Edmund King, the president of the AA, said "any hike in fuel duty would backfire by increasing inflation and hitting those in rural areas who have no alternative to cars". He added "the Government benefits from increased VAT income as well as fuel duty". This is because VAT is charged on the total cost of fuel and fuel duty. How much would a 5p hike in fuel duty cost the motorist? For a daily use car that could be an increase £70 or more a year, including the addition of VAT on the duty. For MGV8 enthusiasts on a limited mileage of say 2,000 to 3,000 miles pa they would pay an additional £18 to £27 a year. Other tax increases Yesterday the current Chancellor, Rachel Reeves, refused three times to rule out raising inheritance tax and capital gains tax in her first budget. The Treasury would also not rule out a wealth tax - a key demand of the Unite union. Starmer warned on Tuesday that "the upcoming Budget would be painful".