Budget 2026 extends 5p fuel duty cut to 30 June 2027

Chancellor John Healey has extended the 5p cut to fuel duty for a further six months, to 30 June 2027, as part of Budget 2026 announced on 28 October 2026¹. The cut was due to be phased out from January³. The government's Scotland and Wales announcements both list the measure as "the extension of the 5p cut to fuel duty for a further six months until 30 June 2027"¹.

The date is reported differently elsewhere. This is Money says "The 5p fuel duty cut will be extended to July 2027, the Chancellor confirmed"⁴, and BBC News says the cut "will be extended to July"³. The Express reports only that Healey "confirmed the extension of the 5p cut to fuel duty for a further six months" without giving an end date⁵. The government publications give 30 June 2027¹.

BBC News reports that drivers will still pay the levy at 52.95p per litre³. It says the 5p "temporary" cut was introduced by Rishi Sunak in 2022³. The Express reports that Healey also deferred the Retail Prices Index increase to 1 July 2027⁵.

Other fuel measures were announced alongside it. The 3.7p cut to red diesel duty continues, which the government says matters for farmers, rural hauliers and other fuel-heavy users¹. Healey also announced a permanent increase to the generosity of mileage rates to support those who drive for work¹. The Energy and Climate Intelligence Unit's Izzy Romilly said savings from the fuel duty freeze are "in the realm of £40 per year for a typical car driver"⁵.

Why it matters for households

The extension keeps the 5p reduction in place for drivers of petrol and diesel cars beyond the point at which it had been due to end. BBC News reports that motor fuel prices have risen sharply owing to the continued impact of the Iran war, with diesel having recently moved above £2 per litre, and that filling a typical family car with diesel has gone up by around £30 since late February, while a tankful of petrol costs about £23 more³.

The measure sits alongside other Budget 2026 announcements affecting household bills. The government says 0% VAT on household electricity bills will be extended for three months, to 30 June 2027¹. BBC News reports the VAT cut on electricity bills, introduced in October, will also be extended to July and was due to end in April³. The government says the 4% tariff on kerosene will be removed, supporting 142,000 Scottish households and 105,000 Welsh households that rely on heating oil¹.

The Budget also included a one-off £100 Household Energy Payment for homes in council tax bands A to D in England, paid from January and funded by extra tax on banks, with equivalent funding for the devolved administrations to decide whether to match³. BBC News reports the Treasury calculates that 60% of households will save an average of £45 a year from scrapping gas standing charges, with higher users paying more³.

On pay, minimum wage rates rise by 3.9% in April, with the National Living Wage for those aged 21 and over reaching £13.21 an hour, up from £12.71³. The government puts the 18 to 20 rate at £11.27 and the 16 to 17 and apprentice rate at £8.31¹. BBC News notes the income tax thresholds remain frozen, so a pay rise could bring more income into tax³. More on how tax works is in our guide.

What happens next

The extended cut runs to 30 June 2027 under the government's wording¹, though press reports put the end date in July⁴. The 0% VAT on household electricity bills is extended to 30 June 2027¹. The £100 Household Energy Payment is due from January³. Minimum wage rates take effect in April³.