At the UK average of 174.07p a litre for petrol (week of 26 October 2026), 81.96p is tax: 52.95p of fuel duty plus 29.01p of VAT, or 47% of the price. For diesel at 199.22p it is 86.15p, 43%. This guide explains exactly what you are paying for, how fuel duty is set, and how the running costs of petrol, diesel, and electric vehicles compare in 2026.
This guide gives an estimate, not financial advice. For decisions about your own money, check with a qualified adviser or HMRC.
The Budget changes were announced on 28 October 2026. Some details are still being confirmed and may change before they take effect, and we update this page as they do.
What is fuel duty?
Fuel duty is a flat tax charged per litre of fuel sold in the UK. Unlike VAT (which is a percentage), fuel duty is a fixed amount that does not change with the price of oil or the cost of refining. The government sets the rate, and it applies equally to petrol and diesel.
The current rate is 52.95p per litre, which includes the temporary 5p cut introduced in March 2022. Before the cut the rate was 57.95p, frozen since 2011. The Budget on 28 October 2026 kept the cut until 30 June 2027; from 1 July 2027 the rate is set to be 60.59p, the pre-cut level uprated by RPI. That adds 9.17p a litre once VAT is included. Our guide to the July 2027 rise shows what it costs per year, and the fuel duty rise calculator works it out for your own car and mileage.
How the pump price breaks down
Here is how a litre breaks down at the UK average pump prices for the week of 26 October 2026, from the DESNZ weekly road fuel prices:
| Component | Petrol | Diesel |
|---|---|---|
| Pump price | 174.07p | 199.22p |
| Fuel duty | 52.95p (30%) | 52.95p (27%) |
| VAT (20%) | 29.01p (17%) | 33.20p (17%) |
| Fuel, delivery and retailer margin | 92.11p (53%) | 113.07p (57%) |
VAT is charged on the total price including the duty, so VAT is one sixth of whatever you pay. Duty is a fixed amount per litre, so its share of the price falls when oil prices rise.
Fuel duty rates for different fuel types
| Fuel Type | Duty Rate (per litre) | Notes |
|---|---|---|
| Unleaded petrol | 52.95p | Standard road fuel |
| Diesel (DERV) | 52.95p | Same rate as petrol |
| Red diesel (rebated) | 6.48p | Restricted uses; 11.65p from 1 July 2027 |
| LPG | 28.88p per kg | Lower rate, fewer filling stations |
| Natural gas (road fuel) | 22.57p per kg | Commercial fleets |
Rates from Budget 2026, Overview of Tax Legislation and Rates, Annex A, for 15 June 2026 to 30 June 2027.
Petrol vs diesel vs electric: running costs compared
Fuel cost per mile and over a year at the average 7,100 miles (DfT National Travel Survey, England, 2025):
| Vehicle Type | Efficiency | Cost per Mile | Annual Cost (7,100 miles) |
|---|---|---|---|
| Petrol | 40 mpg | 19.8p | £1,405 |
| Diesel | 50 mpg | 18.1p | £1,286 |
| EV (home charging) | 3.5 mi/kWh | 7.5p | £533.92 |
| EV (public rapid) | 3.5 mi/kWh | 22.6p | £1,603 |
Home charging uses the Ofgem price cap rate of 26.32p per kWh for 1 October to 31 December 2026; an off-peak EV tariff can cut this by more than half. Public rapid charging at around 79p per kWh (Zapmap, September 2026) costs more per mile than a 40 mpg petrol car. Work out your own car on the fuel cost calculator.
The hidden cost: road tax changes for EVs
Since April 2025, electric cars pay Vehicle Excise Duty (road tax). After a £10 first-year rate, the standard rate is £200 a year in 2026/27 and £210 in 2027/28. Electric cars with a list price over £50,000 also pay the expensive car supplement of £440 a year in years two to six (Budget 2026, Annex A). This does not change the fuel cost advantage, but it narrows the overall running cost gap.
Business mileage and fuel allowances
If you use your personal vehicle for business, HMRC's approved mileage rates let you claim tax-free reimbursement:
- Cars and vans: 55p per mile for the first 10,000 miles, then 25p per mile (55p for every business mile for National Insurance purposes)
- Motorcycles: 24p per mile
- Bicycles: 20p per mile
These rates are designed to cover fuel, wear, insurance, and depreciation. If your employer pays less than these rates, you can claim tax relief on the difference.
Tips for reducing fuel costs
- Use price comparison apps: PetrolPrices and similar services show the cheapest stations near you. Supermarket forecourts are usually among the cheapest.
- Drive smoothly: Hard acceleration and late braking use more fuel.
- Check tyre pressure: Under-inflated tyres increase rolling resistance and fuel use.
- Remove excess weight: Roof boxes and heavy loads reduce aerodynamic efficiency and increase consumption.
- Consider an EV: If you have off-street parking and can charge at home, the per-mile savings are substantial.
Calculate exactly how much your journey will cost in fuel. Compare petrol, diesel, and electric.
Try the Fuel Cost Calculator