HM Revenue and Customs (HMRC) has announced the extension of the 5p per litre fuel duty cut until 31 December 2026. This measure includes the cancellation of two previously planned increases that were due to take effect on 1 September 2026 and 1 December 2026. As a result, the primary Fuel Duty rate will remain steady at 52.95p per litre.
In addition, HM Treasury has confirmed other support measures in response to ongoing international tensions, such as the conflict in Iran. Among these, the duty rate on red diesel will be reduced from 10.18p per litre to 6.48p per litre, effective from 15 June 2026 through to the end of the year.
Further adjustments relate to mileage expenses. Approved Mileage Allowance Payments (AMAPs), the Mileage Allowance Payments (MAR), and self-employed mileage rates will be increased and backdated to 6 April 2026 for the 2026-2027 tax year. The revised rates specify 55p per mile for the first 10,000 miles and 25p per mile for any additional miles beyond this.
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HMRC has advised employers that they may wish to raise the reimbursement amounts provided to employees for business mileage to align with the updated rates. Employers who have reimbursed employees above the former rates-and from whose payments Income Tax and National Insurance contributions were deducted-might need to reassess and adjust their payroll for April and May accordingly.
Employees reimbursed at rates below the new AMAPs can claim tax relief on their job expenses. The relevant tax relief claim forms are currently being updated to reflect these new mileage rates, with HMRC planning to announce when these forms will become available for submissions.
For the self-employed, the new rates will be applicable in their tax returns for 2026-2027, with submission deadlines set for 31 October 2027 for paper returns and 31 January 2028 for online filings.
Martin McCluskey, Minister for Energy Consumers, previously commented on the situation, acknowledging the strain the Middle East conflict has placed on drivers. He noted the Competition and Markets Authority’s (CMA) findings that fuel retailers have not exploited the conflict to unjustly increase prices, though he emphasised that the market remains less competitive than desired.
As part of the government’s intervention, the fuel duty freeze has been extended, and the Fuel Finder scheme continues to assist drivers in locating the best fuel prices. McCluskey added that forecourts are expected to report their fuel prices diligently or risk facing penalties.