Fuel at 175p a litre: what the government can actually do, and what drivers can do now

Most of us notice a fuel price rise at the pump, in the sulk that follows the tap of a card reader. What is easier to miss is how much of that bill never reaches the forecourt at all. When petrol climbs by almost a third in under eight months, the bit that goes to the Treasury climbs too. That is why the latest calls for government action are less about outrage and more about arithmetic.

What happened

According to Visordown's report on RAC analysis, the average price of petrol rose by 31.6% between the end of February and 9 October, reaching 174.79p per litre. Diesel, which has long been the pricier of the two, briefly broke through the £2 per litre mark. Motoring groups and others have responded by urging ministers to act, with 2026 now looking uncomfortably close to record territory.

Work backwards from those figures and petrol was around 133p at the end of February. That means roughly 42p more per litre in a little over seven months. For a driver filling a 55-litre tank from empty, that is about £23 extra per fill compared with the start of the period. For a household that fills up weekly, it adds up quickly.

It is still some way below the 2022 peak of around 191p for petrol. But the speed of the climb, rather than the absolute level, is what has drivers and businesses worried. A steady drift upwards can be budgeted for. A 31.6% jump in under eight months cannot.

Why it matters: the tax slice

Fuel prices are driven by wholesale costs, refining margins, exchange rates and retail competition. This year's rises have been widely linked to turmoil in global energy markets. But the government's share of the pump price is more mechanical, and it is where the policy debate centres.

Two taxes apply to road fuel:

• Fuel duty, a fixed amount per litre. Petrol and diesel have been taxed at 52.95p per litre under the temporary 5p cut introduced in 2022 and repeatedly extended. The schedule for unwinding that cut has been a moving target, so check GOV.UK for the current position.
• VAT at 20%, charged on the whole price including the duty.

That second point is the heart of the complaint. VAT is a percentage, so as the pump price rises, the VAT take per litre rises with it. At 174.79p, the VAT element is roughly 29p per litre (a sixth of a VAT-inclusive price). Add duty and, on those illustrative figures, somewhere around 47% of what you pay for a litre of petrol goes to the Exchequer. Treat that as a rough guide rather than an official breakdown, but it shows why some argue the Treasury is quietly gaining from higher prices.

Fuel duty is also a "tax on a tax" situation. Because VAT is charged on the duty as well as the fuel, any change to duty has a knock-on effect on the VAT charged. Cutting duty by a given amount reduces the pump price by that amount plus 20% on top.

The levers on the table

When groups call on government to "take action", they usually mean one of a handful of options:

1. A fuel duty cut or freeze. The simplest lever, though costly. Fuel duty is a major revenue stream, and the Chancellor has to find the money elsewhere.
2. A temporary VAT reduction on fuel. This would require legislation and sits awkwardly with wider VAT rules, but it would respond automatically to price levels.
3. A variable or "fair fuel stabiliser" style duty. Proposals in the past have suggested duty could fall when wholesale prices spike and rise when they ease. This has never been adopted in the UK in a lasting way.
4. Pressure on retailers. The Competition and Markets Authority has already been examining the sector. Drivers often suspect pump prices rise like a rocket and fall like a feather. Greater price transparency is the government's chosen route here.
5. Targeted support. Rural drivers, delivery firms, taxi drivers and care workers are hit hardest. Targeted help is cheaper than a blanket cut but harder to administer.

Each option has trade-offs. A blanket duty cut helps everyone, including drivers of large, thirsty vehicles, and it works against climate goals. Also, retailers may not pass a cut on in full, which is why the debate keeps circling back to competition.

The legal and regulatory angle

Pump prices in the UK are not directly regulated. Retailers can charge what they like, which is why competition rules and transparency requirements matter. A few relevant points drivers should know:

Price transparency. The Fuel Finder scheme, created under open-data regulations for motor fuel prices, requires forecourts to report their prices so that apps and websites can show them. The aim is to let drivers compare, and to put competitive pressure on retailers. If a forecourt fails to comply, that is a matter for the enforcing authorities rather than something you can resolve at the till.

Misleading pricing. Prices displayed on signs and pumps must not mislead. Consumer protection law, now largely found in the Digital Markets, Competition and Consumers Act 2024, prohibits unfair commercial practices. If a price board shows one figure and the pump charges another, that is worth reporting to Trading Standards via the Citizens Advice consumer service.

Pump accuracy. Fuel dispensers must measure accurately. Trading Standards enforces weights and measures law. If you believe a pump has short-changed you, keep your receipt, note the pump number and report it promptly.

Drive-offs. Rising prices tend to push up fuel theft. Driving off without paying is an offence of making off without payment under section 3 of the Theft Act 1978. Forgetting to pay is not automatically a crime, because dishonesty is required, but you should contact the station straight away if you realise your mistake. Many forecourts use ANPR and share data with the DVLA and police, so it is easy to be traced.

Phone use while hunting for bargains. Searching for the cheapest station on a handheld phone while driving is a criminal offence under the mobile phone rules, with a £200 fine and six penalty points. Plan your fuel stop before you set off, or use a properly mounted device and hands-free setup.

What drivers should know: practical steps

Compare before you drive. Use a fuel price app or comparison site, which draw on the Fuel Finder data. Prices can vary significantly within a few miles, and motorway services are typically the most expensive. The saving on a full tank can outweigh a short detour, but not a long one. Work out whether the extra miles eat the benefit.

Watch the parking trap. Some forecourts operate private parking enforcement, including ANPR cameras. Queuing, stopping to use the shop or overstaying can trigger a parking charge notice. Read the signs on entry. Private charges are a contractual matter, not a council penalty, and there are separate appeal routes through POPLA or the IPC process depending on the operator.

Claim what you are entitled to. If you drive for work, fuel costs may be recoverable:

• Employees using their own car can be paid the HMRC approved mileage rate, currently 45p per mile for the first 10,000 business miles. If your employer pays less, you may be able to claim tax relief on the difference.
• Company car drivers who pay for fuel for business trips can be reimbursed using HMRC advisory fuel rates, which are reviewed quarterly and can change more often during volatile periods. Check the latest rates on GOV.UK.
• Self-employed drivers can generally choose between simplified mileage rates and claiming actual costs. Which is better depends on your circumstances, so speak to an accountant if the sums are significant.

Keep receipts. Whether for a business claim, a pump dispute or a contaminated fuel complaint, evidence matters. Photograph the pump and keep the receipt.

Know your rights on contaminated fuel. If you put wrong or contaminated fuel in your tank, stop driving, keep the receipt and contact the retailer promptly. Goods must be of satisfactory quality under the Consumer Rights Act 2015, but you will need evidence, such as an independent fuel analysis, to support a claim.

Reduce consumption sensibly. Smooth driving, correct tyre pressures, removing unnecessary weight and combining trips can all help. Be wary of anything that sacrifices safety, such as driving dangerously slowly or tailgating to "draft" other vehicles.

Looking ahead

The pressure on ministers is unlikely to ease soon. Several factors will shape what happens next.

The Budget calendar. Any significant change to duty or VAT would normally be announced at a fiscal event. The Chancellor has to weigh pump prices against tight public finances, so a sweeping cut is difficult. A more modest freeze or delayed rise is more plausible.

Wholesale prices. Pump prices follow wholesale costs with a lag. If global energy markets calm, relief should follow, though it often arrives slowly. That delay is the reason transparency measures such as Fuel Finder carry so much weight.

The longer game. Higher fuel costs make electric vehicles and hybrids look more attractive to many buyers, but the government is also developing plans for how EVs will contribute to road taxation. Drivers considering a switch should weigh both sides, including running costs and what future charging may cost.

For now, the practical message is simple. You cannot control the price of crude oil or the Chancellor's red box, but you can control where you fill up, how you claim what you are owed and whether a careless stop on a forecourt turns into a parking charge. Knowing how much of each litre goes to the Treasury will not make the next fill-up cheaper, but it does explain why the calls for action are growing louder.

This article provides general information about UK motoring and tax rules and is not legal or financial advice. For decisions affecting your own circumstances, consult official guidance on GOV.UK or a qualified professional.