Fuel duty is the single largest tax embedded in a haulier’s cost base, and it is changing on fixed dates over the coming months. Every fleet budget built on the frozen rate needs revisiting, because the government’s published timetable unwinds the 5 pence cut in three steps.
The rate you pay depends on the type of fuel. For the fuels that matter to road haulage: petrol, diesel, biodiesel and bioethanol all attract 52.95 pence per litre; liquefied petroleum gas (LPG) is 28.88 pence per kilogram; and natural gas used as fuel in vehicles, including biogas, is 22.57 pence per kilogram. On top of the duty, standard-rate VAT at 20% applies to most fuel - and VAT is charged on the duty-inclusive price, so the tax compounds: a penny of duty costs roughly 1.2 pence at the pump.
Note that the duty rate is identical for diesel and biodiesel. There is no duty discount for choosing bio blends; the environmental incentives run through the certificate scheme, not the duty rate.
The current rate carries a temporary 5 pence per litre cut first introduced at the Spring Statement in March 2022, when the main rate came down from 57.95 pence. The cut has been extended at every fiscal event since - most recently at Budget 2025, which continued it until the end of August 2026, avoiding a 5p increase in March 2026 when the cut had been due to expire.
From there the government has published a staged return to the pre-cut level: rates rise by 1 penny on 1 September 2026, by a further 2 pence on 1 December 2026, and by the final 2 pence on 1 March 2027. The planned inflation uprating for 2026-27 will not take place - RPI uprating resumes from 2027-28 - so the three dated steps are the whole story for the period. Rates for rebated and lower-taxed fuels move by the equivalent proportion.
For a fleet burning 100,000 litres of diesel a month, each penny of duty is £1,000 a month before VAT. The full unwind is therefore a real budget line: plan for it rather than discovering it in the October fuel bill.
Fuel duty is charged on producers and importers, but the legal liability framework matters to hauliers in specific corners. You must account for duty on oils stored on your premises when they leave your warehouse for use within the UK, and businesses holding oil in duty suspension need to register to pay fuel duty to defer payment. Biofuel and other fuel substitutes are liable for duty when they are used - or set aside for use - as motor fuel: if a substitute or additive will be used as road fuel in a diesel engine, you pay the rate for diesel for road use. That is the rule that catches the operator who buys a tank of ‘heating’ oil or a biofuel blend and runs trucks on it: the liability follows the use, not the label.
Rebated fuels - red diesel and marked gas oil - carry their own much lower duty but only for permitted uses, and the permitted-use list narrowed sharply in April 2022. Using rebated fuel on the road is among the most prosecuted fuel offences, and HMRC roadside dips are a real enforcement activity.
Sitting alongside duty is the Renewable Transport Fuel Obligation, which requires suppliers of transport fuel to meet an annual obligation for the supply of sustainable low carbon fuel through a certificate-trading scheme. Suppliers owning and supplying 450,000 litres or more of relevant transport fuel in an obligation year must register. For hauliers the RTFO is mostly upstream - it is why forecourt diesel contains a bio component - but it becomes directly relevant to any fleet large enough to supply its own fuel across the threshold.
Diesel duty is 52.95p a litre today, rising by 1p, 2p and 2p on the first of September 2026, December 2026 and March 2027, with VAT multiplying each step. Model those dates into fuel surcharges and rate reviews now; a customer contract with a fuel adjustment clause that references the duty rate is worth more this year than in any of the last four.
It is worth holding the duty number up against the pump price to see its weight. On a typical diesel price, the 52.95 pence duty plus the VAT on it accounts for a substantial share of every litre - more than the retail margin, the distribution cost and the bio component combined. That is why duty changes move fleet costs more than almost any other single policy lever, and why the three dated increases through late 2026 and early 2027 deserve a line in every rate review and customer surcharge conversation this side of March 2027. Fleets that treat the duty timetable as a known future cost can price it; fleets that treat it as news will spend a year absorbing it.