Fuel duty and VAT explained
The two taxes on every litre, how they interact, and what a penny on duty actually costs a typical driver each year.
5 min read · Written by Sam Richards · Last reviewed 2026-08-17
Key takeaways
- Fuel duty is a flat 52.95p per litre on petrol and diesel, unchanged since the 5p cut in March 2022.
- VAT at 20% is applied after duty, so you pay tax on a tax.
- A 1p change in duty is about 1.2p at the pump once VAT is added.
How fuel duty works
Fuel duty is an excise tax charged as a fixed amount per litre, paid when fuel leaves the refinery or terminal rather than at the pump. Because it is a flat cash amount, it does not shrink when oil is cheap or grow when oil is expensive.
The current main rate for petrol and diesel is 52.95p per litre. That figure includes the temporary 5p reduction introduced in March 2022, which has been extended at each subsequent fiscal event.
Why VAT makes it worse
VAT is charged at 20% on the whole pump price, which already includes duty. Adding a penny to duty therefore adds 1.2p to what you pay, and the Treasury takes 20% of every wholesale increase too.
Businesses that are VAT registered can reclaim the VAT element on business mileage, which is why fleet fuel costs are usually quoted excluding VAT. Private motorists cannot.
What it means for a typical driver
A driver covering 8,000 miles a year at 45mpg uses roughly 810 litres. At 52.95p of duty that is about £430 a year in duty alone, plus VAT on the whole bill.
It also explains why comparing prices locally matters: tax is identical everywhere in Great Britain, so every penny of difference between two forecourts is retailer margin and wholesale timing, and that is the only part you can shop around on.
Frequently asked questions
How much is fuel duty in the UK?
52.95p per litre for standard petrol and diesel, including the 5p cut introduced in 2022 and extended since.
Is VAT charged on fuel duty?
Yes. VAT at 20% is applied to the total pump price, which already includes fuel duty, so you effectively pay tax on the tax.
Does fuel tax vary by region in the UK?
No. Duty and VAT rates are the same throughout the UK, so regional price differences come entirely from wholesale costs, delivery and retailer pricing.
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Prices come from the UK Government's Competition and Markets Authority (CMA) open fuel price scheme and refresh throughout the day. Figures older than seven days are excluded.