Labour tipped to hike fuel duty costs for all petrol and diesel drivers after this date.uk
Labour could increase fuel duty fees for petrol and diesel drivers later this year in a bid to balance the books for extra defence spending.
Motorists face petrol and diesel fuel duty price hikes (Image: Getty)
Labour Chancellor Rachel Reeves has been tipped to raise fuel duty by up to 10p per litre in a potential blow to petrol and diesel drivers. Robert Salter, a director at Blick Rothenberg, warned raising prices could be a consequence of planned increases in defence and transport spending.
The expert stressed the Government could pay for a planned £6billion defence spending package by taking economic measures such as reducing tax relief on pensioners. Mr Salter stressed the Government could restrict Inheritance tax thresholds or raise corporation tax. But, he admitted fuel duty was another lever officials could tap into in a bid to generate revenue.
Experts warn Rachel Reeves may consider fuel duty rises (Image: Getty)
Fuel duty brings in around £25billion per year and is a significant source of revenue for the Treasury.
However, Blick Rothenberg warns that an end to the 5p freeze and an extra raise could be on the horizon at the Autumn Budget later this year.
Robert said: “Another option is to end the ‘temporary’ 5p per litre cut to fuel duty, which was introduced in 2022, and was extended in Ms Reeves’s first budget.
“It is now due to end in March 2026 and may now come to an end. The ‘temporary easement/ is presently costing ca. £2billion per annum.
“The Government could go further and raise it by say 10p per litre, which would potentially raise £4bn.
“But practically, the Government needs to look at alternative options for raising revenue from motorists, as fuel duty will be coming down over the next few years, as more and more people move to e-vehicles or at least hybrids.”
Robert warned there was a “risk” that hiking fuel duty fees too sharply could accelerate the transition to electric vehicles.
However, if everyone adopted the new models the Government could stand to lose significant revenue with an alternative to fuel duty not yet mapped out.
