According to documents published early by the Office of Budget Responsibility (OBR) ahead of the Budget, Chancellor Rachel Reeves will confirm that fuel duty will remain frozen until September 2026, retaining the 5p cut that was introduced in 2022 and shelving Treasury plans to let the levy rise in line with inflation.
From April 2027, the Government has stated that the fuel duty rates will then be uprated annually by RPI
The OBR document stated that “the total cost of fuel duty freezes from 2010-11 to 2026-27 has risen to £120 billion.”
The decision, which extends a measure first brought in to cushion households from the surge in oil prices following Russia’s invasion of Ukraine, will cost the exchequer more than £3bn.
Reeves’ choice to maintain the reduction comes despite internal Treasury proposals to end the relief, which had originally been billed as temporary.
Successive Chancellors have renewed the cut to avoid a backlash from motorists, and fuel duty has now been frozen since 2011.
The Treasury had explored reverting duty to its pre-2022 level and allowing it to increase with inflation, a move that would have generated significant revenue.
Reeves ultimately dropped the plan, meaning both the 5p reduction and the wider freeze will remain in place for another year.
For drivers, the confirmation provides clarity after months of speculation.
The combined reliefs continue to cost around £3bn annually, but the Government argues the decision supports households and businesses that remain exposed to high fuel costs.
