Fuel - Excise duty increase
On 16 July 2008 the Chancellor announced that the fuel duty increases
planned for 1 October 2008 would be postponed.
These increases will now take place from 1 December 2008, to offset the recent reduction in prices and VAT rate.
Excise duty on unleaded petrol and diesel will rise by 2p per litre, which is an increase of just over 4% on current rates. This will be followed by further increases of 1.84p per litre on 1 April 2009 and by 0.5p per litre above indexation on 1 April 2010. Excise duty on leaded petrol will also rise by 2p per litre. The same increase of 2p per litre will apply to biofuels (biodiesel and bioethanol) as a result of the Chancellor's decision to maintain the existing duty differential of 20p per litre between main road fuels and biofuels.
However, from 2010 the 20p per litre differential will be abolished and thereafter duty will be charged at the same rate as main road fuels.
The effective rate of duty for non-road fuels subject to rebated rates of excise duty will also increase in line with the duty on main road fuels.
When used as a road fuel the rate of excise duty on liquefied petroleum gas (LPG) and natural gas (including biogas) will increase by 4.28p per kg and 2.9p per kg respectively on 1 December 2008. Further increases are scheduled on 1 April 2009, of 4.05p per kg and 2.66p per kg respectively.
The existing duty differential applicable to biogas (equivalent to 40.88p per litre) will remain at present levels at least until the Budget of 2012.
Finally, on and after 1 November 2008 a new fiscal definition was introduced for aviation gasoline (Avgas). The duty rate will be 0.3103p per litre from 1 December 2008 (a 1p per litre increase from the current rate).
These changes are intended to negate the 2.5% reduction in VAT from 17.5% to 15% on these products.