Fuel duty rises next year and electric car owners will pay 3p per mile from 2028

Fuel duty will be frozen again, but only for five months until September 2026, the chancellor announced in her budget as she confirmed a new 3p-a-mile charge for electric cars from 2028.

- Gwyn Topham

Rachel Reeves will freeze fuel duty in April at 52.95p a litre for petrol and diesel - a 16th successive year without a rise - but the so-called "temporary" 5p cut introduced by Rishi Sunak will be reversed in stages from September.

Raising fuel duty has been politically contentious since the first freeze announced by the coalition in 2010, but the eventual rise will help maintain a differential in running costs to encourage the transition to electric cars when the new mileage-based levy on EVs takes effect from 2028-29. Fuel duty in effect costs about 6p a mile on average for cars.

The Office for Budget Responsibility (OBR) said the continued freeze of fuel duty until September and the staggered reversal of the 5p over late 2025-26 would cost the Treasury an extra £2.4bn next year and £900m a year thereafter, but it would bear down on Britain's CPI inflation by 0.1 percentage points compared with its officially forecast rise in duty.