Rachel Reeves could increase fuel duty by 7p as Treasury grapples with £40bn black hole
Rachel Reeves will be forced to make a big decision on fuel duty in the October Budget
PA
Drivers could see a 7p hike in fuel duty as Chancellor Rachel Reeves is said to be considering raising the tax in the upcoming budget announcement.
The move could make Britain an even greater outlier in Europe, with the country already having the highest duty on diesel and ranking ninth highest for petrol among EU nations.
Now experts are warning that if the "temporary" 5p cut in fuel duty is not renewed, the UK will rise to sixth place for petrol taxes.
This potential increase comes at a time when pump prices are at their lowest since Russia's invasion of Ukraine, leading ministers to believe they can justify a fresh tax raid.
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Fuel prices are expected to continue rising in the near future PAThe TaxPayers' Alliance analysis revealed that UK drivers already pay 6p a litre above the EU average for petrol and 16p more on diesel.
Fuel duty currently stands at 52.95p per litre, but if the Chancellor considers scrapping the 5p cut in fuel duty it would mean a stark increase in costs.
Treasury officials have reportedly advised Reeves that this is a "now or never" opportunity to end a 14-year freeze on fuel duty. The potential 7p increase could add £3.85 to the cost of filling up an average family car, potentially undermining Labour's claim that it will not impose higher taxes on working people.
Whitehall sources suggest that along with ending the temporary cut, the Chancellor is also contemplating reinstating the annual fuel duty increase.
An AA survey has revealed that winter conditions could increase driving costs by 20 to 48 per cent if combined with fuel duty increases. This comes as a sharp warning to motorists already grappling with potential tax hikes.
AA President Edmund King said: "Hiking fuel duty at the onset of winter is the worst possible time to do it. It is when cold engines and increased use of heaters, wipers and lights send fuel consumption and costs shooting up."
The Chancellor is reportedly considering the fuel duty increase to address a £40billion black hole in the country's finances. However, this move could significantly impact household budgets as the colder months approach.
However, critics have argued that the timing of such a hike could not be worse for British drivers, who are already facing increased costs due to seasonal factors.
A group of Conservative MPs, led by Saqib Bhatti and Howard Cox from FairFuelUK, plan to deliver a petition of 130,000 signatures to Downing Street today. The petition demands the continuation of the fuel duty freeze.
John O'Connell, chief executive of the TaxPayers' Alliance, expressed concern about the potential hike. He told GB News: "Motorists will be panicking that 14 years of good work on fuel duty is about to be undone in an afternoon, hitting their wallets at the worst possible time.
£Even with over a decade of freezes, UK taxes on petrol and diesel remain high by EU standards. Rachel Reeves should slam the brakes on any proposals to hike this tax."
The potential increase has sparked debate about its timing and impact on British motorists. Critics have argued that such an increase could disproportionately affect working people and families, particularly as winter approaches.
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Fuel duty has been frozen at 5p per litre since 2022PAThe TaxPayers' Alliance warned that the UK's position as a high-tax outlier for fuel could worsen if the proposed changes are implemented.
Despite the Government's consideration of the tax increase, opposition remains strong. The petition being delivered to Downing Street demonstrates the public's resistance to further fuel duty rises.
As the budget announcement approaches, all eyes will be on Reeves with her decision on fuel duty having far-reaching implications for millions of British drivers and could potentially impact the country's economic recovery.