Fuel Duty 5p Cut Ends 31 December: What It Means for EV Costs

The 5p cut in fuel duty is due to end on 31 December 2026, and the Budget on 28 October will decide whether it does. Under the current default, duty on petrol and diesel rises by 3p to 55.95p a litre on 1 January 2027, then by 2p to 57.95p from 1 March (PetrolPrices). That would nudge up the saving from switching to an electric car, though the gap is smaller than you might expect.

This is a preview: the Budget has not happened, and nothing has been announced on fuel duty.

Where fuel duty stands now

Prime Minister Sir Keir Starmer announced on 20 May 2026 that the 5p cut, introduced in March 2022, would be extended for the rest of the year (ITV News). Rises that had been planned from September were scrapped, as reported by What Car?. The government estimated the move would save the average motorist over £120, and the reason given was pump prices after Iran restricted tankers through the Strait of Hormuz.

Duty therefore stays at 52.95p a litre on petrol and diesel until 31 December (GOV.UK). Prices at the pump have since climbed again: the UK average for petrol reached 173.8p a litre in the week ending 27 September 2026 (Fuel Finder).

Date	Petrol and diesel duty	Change
Until 31 December 2026	52.95p a litre	5p cut in place
1 January 2027 (default)	55.95p a litre	+3p
1 March 2027 (default)	57.95p a litre	+2p

What could the Budget do?

Three outcomes are possible, and we cannot say which is likelier.

• Let the default stand. Duty rises in two steps, as in the table above.
• Extend the cut again. Duty stays at 52.95p. The cut has been extended repeatedly since 2022, and with petrol rising again the political pull is obvious, but the cost to the Treasury is the counterweight.
• Change the timing. Delay or reshape the two steps, which would split the difference.

The decision matters to EV drivers only at the margin, but it sets the backdrop for the next change: the pay-per-mile charge on electric cars.

What the rise does to running costs

To show the effect, we have built an illustrative comparison (EV Compared illustrative calculation). The assumptions are ours, not official figures: a petrol car doing 45mpg, an electric car doing 3.5 miles per kWh, 8,000 miles a year, and home electricity at the October 2026 price cap rate of 26.32p per kWh (Uswitch). Petrol uses the 173.8p average above, with each duty increase carrying VAT on top, so 3p becomes 3.6p and 5p becomes 6p at the pump.

EV Compared illustrative calculation	Petrol per litre	Petrol per mile	Petrol per year	Home EV per year	Gap
Now	173.8p	17.6p	£1,405	£602	£803
After 1 January default	177.4p	17.9p	£1,434	£602	£832
After 1 March default	179.8p	18.2p	£1,453	£602	£851

The full default schedule adds about £48 a year to the petrol bill of this example car. That is real but small beside the roughly £800 gap that already exists at home charging prices. Crude oil, which helped push petrol up about 5p in September, moves the number far more than duty does.

Public charging is a different story

The same sums look different away from your driveway. On our assumptions, petrol costs 17.6p a mile today, so an electric car charged at more than about 61p per kWh (61.4p exactly, at 3.5 miles per kWh) costs more per mile than the petrol car. Check your own network’s price against that line, because the duty decision does nothing for drivers who rely on pricier public charging. Our public charging cost guide and petrol versus EV cost per mile comparison show where the break-even sits for different networks.

The bigger change: eVED in 2028

Electric cars pay no fuel duty, but a pay-per-mile charge is coming. Electric vehicle excise duty (eVED) is due to start in April 2028 at 3p a mile for battery electric cars and 1.5p for plug-in hybrids (ICAEW). At 8,000 miles, 3p a mile is £240 a year, which would take about £240 off the running cost gap in our table, leaving roughly £560 to £610 depending on the fuel duty outcome. Our explainer on pay-per-mile road tax covers how it will work.

What this means for you

If you drive a petrol or diesel car and are weighing a switch, the fuel duty decision should not drive the timing. The default rises add about £48 a year to a typical petrol bill, while your home electricity tariff and annual mileage change the sums by far more. Use our running cost calculator with your own mileage, and check our home charging cost guide before you rely on a public-charging-only plan.

If you already own an EV, nothing changes on 1 January. Watch the Budget on 28 October for the fuel duty line and for any news on eVED, and read our Budget preview for electric cars for the wider picture.