Oil price spike could end fuel duty revenue uptick
The latest HMRC monthly tax receipts show fuel duty receipts for April 2025 to February 2026 are £22.5b, which is £0.2b higher than the same period last year.
Sheena McGuinness, Co-Head of Energy and Natural Resources at RSM UK said: “Whilst today’s figures show an uptick in fuel duty revenues when comparing the 2024/25 annual revenues to that from April 2025 to February 2026, the monthly comparables show a 6.4% decrease when comparing February 2025 to February 2026 and the receipts also fall short of OBR revenue forecasts. This could be a result of a longer-term shift to electric vehicles (EVs), combined with consumers beginning to limit their vehicle usage to necessary journeys, amid concern over increasing fuel prices and fears of fuel shortages.
“Whilst EV uptick has seemed to stall recently, the volatile fuel prices we have seen in recent weeks are likely to form a strong incentive for consumers to reassess their appeal in comparison to petrol and diesel vehicles.
“Petrol and diesel prices are expected to rise again by 3p and 9p respectively in the coming week with average prices increasing by nearly 10p and over 20p per litre for petrol and diesel respectively since the war began. Analysts predict that every $10 increase in the oil price pushes up pump prices by roughly 7p a litre. This will likely have a further negative impact on the appeal of petrol and diesel vehicles compared to their EV alternatives.
“Within days of the escalation in the Middle East crisis, the cost of imported Liquefied Petroleum Gas (LPG) increased significantly in the UK. The UK’s exposure to wholesale gas prices as a net importer of energy is a double-edged sword, which will not only impact the price of EV charging, but also increases the possibility of fuel supply challenges in the coming months.
“The volatility of fuel prices calls to question whether the government will review its plans for a rise in fuel duty in September, particularly as spiking prices will, in turn, further increase VAT revenues. If the increase in fuel duty does go ahead as planned, then this will mark another hit to consumers and may influence more motorists to buy fully electric cars to avoid the additional costs.”