Budget 2022: Fuel duty cut but road tax set to increase

Chancellor of the Exchequer Rishi Sunak announced a 5p-per-litre cut to fuel duty but increased road tax (VED) for most drivers in the Spring Budget 2022.

Fuel Duty

Fuel duty has been cut by 5p-per-litre until March 2023 in response to record fuel prices. 

The Chancellor claims the move will save the average motorist £100 - but much depends on fuel retailers passing on the saving.

There was no change to VAT on fuel duty. 

Vehicle Excise Duty (Road Tax)

New road tax rates, which affect all cars and vans in the UK, will come into effect on 1 April 2022.

There is a new standard rate of £165 (up from £155) for most new cars registered from 1 April 2017, except hybrids and electric vehicles. 

Cars with a list price above £40,000 will pay an additional £355 per year - £520 in total for petrol or diesel - for five years in which the standard rate is paid (from the second year the vehicle is taxed). Cars that emit zero CO2 are not charged the premium rate of £355.

Road tax for Euro 4 and Euro 5 compliant vans remains at £140 but all others will see an increase from £275 to £290. 

Read our guide to Van and pick-up road tax VED rates 2022-2023

VED for electric cars remains zero

There were no announcements around overhauling the road tax system despite repeated warnings that electric car drivers cannot enjoy zero road tax forever and that the Government faces a £35 billion fiscal black hole from the switch to electric vehicles.