23 March 2022

UK fuel duty changes

The Government has today announced a reduction in fuel duty, effective from 6pm on 23rd March 2022 and in place until March 2023. Here’s what this announcement means for our customers.

What is fuel duty?
Fuels in the UK typically attract two forms of tax: fuel duty (sometimes known as ‘excise duty’) and VAT.

Fuel duty is automatically included in the price customers pay for diesel, petrol and other fuels used in vehicles or for heating. The rate of fuel duty depends on the type of fuel, and sometimes on how it’s used. VAT is then added on top, at a rate of 20% on most fuels, or the reduced rate of 5% on domestic heating fuel.

How are the duty rates changing?
The table below shows the old and new duty rates for most of our fuel grades. The decrease of 5 pence per litre applies to petrol and diesel, and is equal to an 8.63% reduction in the rate of duty. Marked gas oil (red diesel) and fuel oil are being decreased by the same percentage (-8.63%).

The new rates are effective from 6pm on 23rd March 2022 onwards, until at least March 2023.

Further information on fuel duty rates is available from the HMRC website here >

Why is the duty rate changing?
The intervention represents the largest cut of fuel duty rates at once, ever. This measure is intended to reduce the cost of fuel to support households and businesses at a time of high oil prices and cost-of-living increases.

What does this mean for my price?
The price of any orders delivered or placed on or after 6pm on Wednesday 23rd March 2022 will be adjusted to reflect the above duty rate changes, where applicable. This will be through either changes to the pence per litre (ppl) rate for invoiced orders or (in rare cases) by the issuance of a credit note / reinvoice.

Any new quotes or prices issued from Thursday 24th March 2022 will reflect the new duty rates.

The same applies for our fuel card customers, where the price of any fuel drawings completed after 6pm on Wednesday 23rd March 2022 will be adjusted to reflect the new duty rates. Customers who are in receipt of weekly prices will have new prices issued, which will show the new prices in effect from 6pm on Wednesday 23rd March 2022 onwards.

How does this affect the forthcoming red diesel changes?
Red diesel (aka gas oil or ‘off-road diesel’) is a fuel intended for use in limited permitted circumstances and therefore attracts a lower rate of duty. There are strict legal requirements about when and how it can be used, which is why it is dyed red to identify illegal use. On 1st April 2022, regulation changes come into effect which further restrict the specific purposes and applications for which red diesel is permitted to be used. Read more about the red diesel changes here >

Today’s announcement does not affect or alter the forthcoming red diesel changes in any way, and the new red diesel regulations will still come into effect on 1st April 2022. It does, however, slightly lessen the impact for those businesses who are moving from red to white diesel, as the duty difference between the two fuel grades is 42.77ppl under the new fuel duty rates (vs 46.81ppl difference at the old rates).

I’m a domestic heating oil user. Will these duty changes reduce the price I’m paying?
Unfortunately not. As marked kerosene (aka burning oil or heating oil) already attracts a nil rate of fuel duty, the fuel duty changes will not affect prices of home heating oil.

I’m a Furnaceflame™ customer. Will these duty changes reduce the price I’m paying?
Unfortunately not. For duty purposes, Furnaceflame is classified as a kerosene, meaning it attracts a nil rate of duty. That means the price has not decreased as a result of the announcement, although Furnaceflame remains a very attractive option for any gas oil customers currently using gas oil for heating applications. Read more about Furnaceflame here >