With the Autumn Budget fast approaching, the Chancellor is under growing pressure to raise fuel duty for the first time in more than a decade amid falling tax receipts and a widening hole in the public finances.

New HMRC figures show fuel duty revenues slipped to £12.2 billion between April and September 2025 — down £26 million year-on-year — as more drivers switch to electric and hybrid vehicles.

The Treasury has already lost around £100 billion since the duty freeze began in 2011, and analysts warn that reversing the 5p-per-litre cut could be essential to stabilise the UK’s finances.

Losing money

With the Autumn Budget only weeks away, new figures from HM Revenue & Customs (HMRC) have reignited debate over whether the Chancellor will raise fuel duty for the first time in over a decade.

Between April and September 2025, the Treasury collected £12.2 billion in fuel duty, £26 million less than during the same period last year.

The fall continues a long-term decline in receipts as drivers shift from petrol and diesel vehicles to electric and hybrid alternatives.

Duty bound

Fuel duty, charged at 52.95p per litre, has been frozen since 2011, apart from a temporary 5p-per-litre cut introduced in March 2022 in response to the surge in global oil prices following Russia’s invasion of Ukraine.

The measure, intended to last 12 months, has been repeatedly extended by successive governments.

However, analysts believe this year’s Budget could finally mark a turning point. Sheena McGuinness, co-head of energy and natural resources at RSM UK, said the fall in receipts highlights “a widening gap in public finances which the Government needs to tackle.”

“Historically, fuel duty made up almost 7% of the UK’s total tax take in 2019–20,” she said. “But the Office for Budget Responsibility now expects it to account for just 2% in 2025–26. With oil prices at their lowest level since early 2021, the Chancellor has a timely opportunity to reverse the 5p cut and align rates with inflation, strengthening public finances.”

According to the OBR (Office of Budget Responsibility), reintroducing the 5p duty and linking future increases to the Retail Price Index could raise around £2.7 billion over the next financial year.

Without such action, the Chancellor will have to find equivalent revenue from other sources.

Since the freeze began in 2011, the OBR estimates that the Treasury has forgone about £100 billion in potential revenue.

Risky business

Despite the fiscal pressure, industry bodies are warning that any increase could have wide-ranging consequences for households and businesses.

The Road Haulage Association (RHA) estimates that ending the duty freeze could add £7.3 billion to household living costs between now and 2029, as higher transport expenses are passed on to prices for food, energy, and other essentials.

Richard Smith, managing director of the RHA, said: “Diesel already costs more here than anywhere else in Europe, and over half of every pound at the pump goes straight to the Government. A rise in fuel duty would be a hammer blow to a key industry already operating on tight margins. These costs don’t disappear — they filter through the supply chain and hit families at the checkout.”

The Petrol Retailers Association (PRA) has echoed that sentiment, warning that a higher duty would undermine inflation control and economic stability. Gordon Balmer, the PRA’s executive director, urged the Government to maintain the freeze.

“Forecourts are doing all they can to keep prices low despite economic pressures. The last thing businesses and drivers need is a duty increase. We urge the Chancellor to commit to a full freeze and make the 5p rebate permanent,” says Smith.

Changing landscape 

Fuel duty remains one of the Government’s most significant single sources of revenue, raising around £25 billion annually.

This is roughly equivalent to what the UK spends on policing and prisons combined.

Yet as the transition to electric vehicles accelerates, the tax base is eroding rapidly.

McGuinness argues that in the long term, the Treasury must design “a new, sustainable system” to tax low- and zero-emission vehicles, ensuring that road users contribute fairly to infrastructure and maintenance costs.

‘Pay per Mile’ is the most popular concept that has been extensively researched and studied over the last decade; however, any change is always controversial.

However, ‘Pay per Mile’ is seen as a way of encouraging less car use, better for the environment and public health, while penalising those who use road vehicles more, often in a professional capacity.

Any system would have to be weighted effectively so as not to adversely penalise those who have no choice but to use a road vehicle. 

The Budget

The Autumn Budget on 26 November will reveal whether the Chancellor prioritises fiscal responsibility or opts to keep fuel duty frozen to ease the pressure on motorists and businesses still grappling with the cost of living.