Drivers facing new 84p per litre charges | Tech News

Despite repeated calls from indignant drivers, the federal government continues to be holding firm on plans to finish the fuel obligation freeze from September this yr – which when mixed with current rocketing costs on the pumps may see 84p per litre tax payments for petrol drivers.

From September this yr, the top of the fuel obligation freeze is set to push costs on the pumps up by 5p a litre, and this change will happen simply months after the struggle in Iran has seen costs spiral at filling stations.

A 5p cut in fuel obligation beforehand put in place has already been prolonged again, however solely till September 2026, when it’s anticipated to be reversed by a ‘staggered approach’ steadily rising the obligation till March 2027.

The tax has been set at 57.95p since 2011, however the efficient charge paid by drivers since 2022 has been 52.95p as a result of a “temporary” 5p cut that stored getting prolonged by successive governments.

It means drivers can be paying very almost 58p a litre in fuel obligation taxes on each litre of petrol they buy, not together with the 20% VAT which is charged on the ultimate price on high, as soon as the fuel obligation freeze ends.

Then, VAT is charged on high of the fuel obligation, pushing the tax take per litre up to a dizzying 84p per litre primarily based on as we speak’s costs.

The RAC explains how it really works: “The total retail price paid at the pump also includes a significant amount of tax – 57.95p per litre in fuel duty and 20% VAT.

“This means that over 60% of the price we pay at the pump goes direct to the Treasury, which together with car tax and ‘showroom’ tax totals more than £40bn a year.”

Fuel value calculator DVANA exhibits how this works in apply. At present average petrol costs of 156.98p per litre in line with the RAC’s newest petrol price comparability, drivers will, as soon as the fuel obligation freeze ends, be paying nearly 58p in fuel obligation and 26p in VAT for a complete of 84p in tax charges per litre, with the opposite 73p going to the retailer.

Treasury minister James Murray defended the choice to take away the fuel obligation freeze in Parliament on the finish of April. He stated: “We inherited plans from the previous government that would have seen fuel costs go up for people across the country.

“We have extended the 5p cut in fuel duty.

“We have extended the freeze, and that is an important way of helping people with the cost of living right now.”