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Motorists Hit by VAT Rate Hike!

Once again the motorist is being asked to pay as VAT on petrol and diesel was raised by 2.5 % today from 17.5% to 20%

Looming petrol duty and VAT rises are to push record petrol prices higher.

On New Year’s Day, a government fuel duty increase put another 0.76p on to both petrol and diesel.

The AA estimates that the two increases will add around 3.5p to the cost of a litre of both petrol and diesel.

The average price of unleaded petrol in the UK stands at 124.16p, according to Experian Catalist and the BBC.

This time last year, petrol was at 107.74p a litre and diesel at 109.46p.

Diesel currently costs, on average, 128.35p a litre – some five pence below its record high of July 2008.


The AA estimated that in total, motorists are spending almost £10m more a day on petrol than this time a year ago.

And the RAC Foundation pointed out that fuel tax would rise even further in April.

VAT hike

“Given that each penny increase in fuel duty raises about an extra £500 million for the Exchequer, it is easy to see why the chancellor is tempted to hike rates,” said the foundation’s director, Professor Stephen Glaister.

“But if the nation’s 34 million motorists are pushed too far they will drive less and the Treasury could actually see their tax take fall.

“At the election there was much talk about a fuel duty stabiliser. Drivers will rightly be wondering what happened to that idea.”

Car Insurance already suffering under the hard market with some of the most expensive premiums ever, will also see prices pushed higher as IPT – Insurance Premium Tax is raised by 1% to 6% of the total premiums paid.

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