Petrol and diesel drivers warned of fuel duty price hike plans which could force costs up
Some analysts have called on the Government to hike the rate of fuel duty
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Drivers could see petrol and diesel prices rise, with some experts suggesting that the rate of fuel duty could be raised to help the Government.
In 2022, Rishi Sunak, who was Chancellor at the time, announced that the rate of fuel duty would be cut by 5p per litre.
This was being done in response to the rising petrol and diesel prices after a surge in global oil prices and the Russian invasion of Ukraine.
It was agreed again earlier this year when the current Chancellor Jeremy Hunt announced a 12-month extension to the cut in fuel duty rates.
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According to the Government, the initial 12-month cut represented a £100 saving for the average car driver, £200 for those driving vans and £1,500 for hauliers.
It was estimated that this would represent a tax cut of around £2.4billion between March 2022 and 2023, and a further £5billion between March 2023 and 2024.
Some Treasury officials have called on Chancellor Jeremy Hunt to raise fuel duty for the first time in more than a decade, the Telegraph reported.
Analysts said that raising fuel duty by at least 2p could claw back £5billion for the Government.
Treasury officials said the move would not be seen as a tax rise as the duty will still be lower than when it was last raised in 2011.
Akansha Nath, Head of Partnerships at Credit Karma, said: “A rise in fuel duty will cause another bump in the road for people’s budgets.
“Already two in five London car owners have been forced to change or give up their current car under the ULEZ expansion and drivers across the UK are facing steep price rises in car insurance premiums too.
“Our Great British Credit Report study found 18 per cent intend to use some kind of credit to buy a car in the next year to manage these increasing costs.”
Before 2022, the fuel duty rate was 57.95p per litre, which was slashed to 52.95p. The proposed changes would see it grow to almost 55p.
RAC Fuel Watch data suggests that both petrol and diesel prices should fall in the near future, with drivers paying 154.11p for unleaded and £1.61 for diesel.
Despite this, many experts have slammed major retailers and supermarkets for failing to cut the price of fuel prices despite a drop in the cost of global oil prices.
Akansha Nath continued, saying: “If you need to borrow to keep up with rising costs, it’s important to not overpay.
“One way of doing this is consolidating debts to reduce monthly repayments or making sure you have a strong credit score in order to get the best deals possible.”
There had been suggestions from the Office for Budget Responsibility (OBR) before the 2023 Spring Statement to hike fuel duty rates by a staggering 23 per cent.
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Petrol and diesel prices could increase if fuel duty rates rise
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It was believed that this would bring an additional £5.7billion in taxes for Government coffers.