Fuel duty rise postponed due to pressure following Iran War price rises
Wed 20 May 2026
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The Government has announced that the planned 1p rise in the rate of fuel duty set for September this year will be postponed in the wake of fuel price increases caused by the Middle East war. The Government has also announced increases in Approved Mileage Allowance Payments (AMAP) and in company car Advisory Fuel Rates (AFR). Meanwhile, there have been calls to delay plans to introduce the proposed mileage tax on electric cars (eVED), scheduled for 2028.
The Prime Minister announced that the current rate of fuel duty of 52.95p would remain unchanged until the end of 2026, when the situation will be reviewed. Fuel duty had previously been cut by 5p per litre from 57.95p in March 2022 in response to the increase in oil prices caused by Russia's invasion of Ukraine. The November 2025 Budget announced that the cut would be reversed in three stages: 1p on 1st September 2026, 2p on 1st December 2026 and 2p on 1st March 2027, restoring rates to their pre-March 2022 level.
The Government says that the planned inflation increase for 2026-27 will not take place, but fuel duty rates will be updated by the Retail Prices Index (RPI) from April 2027.
To support the haulage industry, the Prime Minister also announced a 12-month road tax holiday for hauliers and a reduction in the rate of duty on red diesel.
In a separate announcement, the Government has increased Approved Mileage Rates to 55p from 45p for the first 10,000 miles travelled by business drivers in each tax year. There were also increases in Advisory Fuel Rates which will also benefit business drivers.
Against the backdrop of concessions to drivers of petrol and diesel vehicles, electric vehicle advocacy groups are calling for a delay in the introduction of the EV pay-per-mile levy (eVED) which is scheduled for introduction in 2028. The UK electricity trade association, BEAMA; EV drivers' association, EVA England; ChargeUK, which represents the charging infrastructure industry; and the Renewable Energy Association (REA) co-signed a call on the Government to delay introduction until 2030.
Analysis by BEAMA says that the charge could cost the UK economy up to £4.8bn if introduced in 2028 by delaying EV uptake. BEAMA's research is based on the experience of New Zealand where EV sales slumped following the introduction of a pay-per-kilometre tax.
The coalition argues that introducing eVED in 2028 will damage consumer confidence, suppress demand and create unworkable conditions for leasing companies and fleet operators. The group also says that the process for collecting the tax from drivers is not yet fit for purpose and that more time is needed to ensure a smooth introduction.
Matt Adams, Head of Electrical Transport Systems at BEAMA said: “Introducing the pay-per-mile policy early is a fiscal own goal. It will slow EV uptake, reduce EV charging investments, and cost the UK economy more than the Treasury stands to raise with the taxation. A delay to 2030 would provide essential stability at a critical point in the EV transition. Manufacturers in the EV supply chain need a clear message from Government to continue investment into local communities and the wider UK economy.”
Photo courtesy Ali Mkumbwa, Unsplash
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