The chancellor, Rushi Sunak, announced that fuel duty will be cut by 5ppl at 6 pm on the 23rd March. This fuel cut will reduce the excise duty on road fuels from 57.95ppl to 52.95ppl. This is the first change in fuel duty since March 2011.
This deduction in fuel duty occurs before VAT is applied, so the overall effect of this reduction is 6ppl, with VAT being applied at 20%.
Crude Oil prices hit an eight-year high earlier in March 2022, which in turn saw petrol and diesel prices rise sharply. Crude Oil prices have dropped back to $112 per barrel from $130 in early March; however petrol and diesel prices at the pumps remain high, with the average reported prices of £1.66 and £1.78 respectively.
When will I see the change?
The excise duty takes effect at 6pm on the 23rd March 2022. However, you may not see this at the pumps straight away.
The fuel currently in forecourts around the UK has already had the excise duty paid on it; as such, the forecourts can’t discount the price you will pay straight away without hitting their profit margin. There is also fuel stored within the UK, in fuel storage facilities, that will also have had the duty applied, and so this will also not benefit from the reduced rate.
Only fuel that hasn’t had the duty applied will be able to take advantage of this reduction straight away, so depending on where you are within the UK will depend on when you are likely to see these reductions.
This is likely to lead to more widespread pricing at forecourts, as current stock levels within the supply chain will significantly affect the price at the pump. This is on top of a volatile market that has already seen the spread of pricing at forecourts widen.