A welcome trick but no treat for drivers – AA Budget reaction

Commenting on the Budget announced today which saw the delay of the 5p fuel duty increase extended, Edmund King, AA president, said; "While the 5p freeze has been extended to July 2027, this only delays a £3.30-a-tank price shock later*. Higher pump prices impact everyone through rising bills and increased inflation. The Chancellor could have gone further and cut fuel duty by an extra 5p, even if only for diesel which is the workhorse fuel for UK PLC. Increased VAT receipts from fuel could have helped fund this.

"Diesel prices currently sit at 198.70 ppl compared to 178.90 ppl at the end of July. The heightened cost of diesel is undoubtedly adding an extra strain to household budgets as they head to the shops. Dropping diesel fuel duty by a further 5p a litre would have soon lowered transport costs by 0.5% in one go, courtesy of fuel surcharges added to invoices by many delivery companies**.

"Delaying the fuel duty increase is a welcome 'trick', but no 'treat' for drivers. Over the past 24 hours, almost a thousand forecourts have cut petrol prices, yet just over two hundred have cut diesel prices*** due to volatile wholesale costs. Now retailers know the lay of the land on fuel duty, where costs are coming down retailers need to pass them on as quickly as possible. We hope the regulator will be monitoring prices closely."

On the retention of the 20% VAT rate on EV public charging, Mr King said; "The Chancellor has missed the chance to help accelerate the transition to electric cars by retaining the 20% VAT rate on public charging. Around two fifths of households do not have any form of dedicated off-street parking, and retaining the difference in VAT rates only widens the Pavement Tax. Even more so considering that VAT on domestic energy is temporarily held at 0% to 1 July 2027 which is welcome and reduces the cost of home charging."

On the continued 12% standard rate of Insurance Premium Tax, Mr King said; "This was a missed opportunity to help ease the cost of driving and help improve road safety. IPT is a tax on legal motoring, and offering some relief on IPT would help drivers, especially young drivers, find competitive insurance premiums."

* A 5p change in fuel duty brings with it an additional 1p in VAT. A typical car tank carries 55 litres.

** Add 0.25% for each additional 2.50 ppl increase in diesel price’ Shipping Surcharges | FedEx United Kingdom TVS SCS | Courier Fuel Surcharge | Accuracy Ensured

*** AA analysis of the 10.00 Fuel Finder uploads from 27 October 2026 and 28 October 2026.