Price Breakdown
See exactly where your money goes when you fill up. Tax, duty, crude oil, refining, and more.
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Cost per litre
Where your money goes
What makes up the price
Fuel Duty
53pFixed tax of 52.95p per litre paid to HMRC
VAT (20%)
24.8p20% Value Added Tax on the total price including duty
Crude Oil
44.2pCost of raw crude oil on international markets
Refining
8.5pCost of refining crude oil into petrol or diesel
Biofuel & Green Obligations
5.7pRTFO, greenhouse gas reduction, development fuel obligations
Delivery & Distribution
5.7pTransport from refinery to depot to forecourt
Retailer Margin
7.1pForecourt operating costs and profit (typically 3-8p)
Fuel Duty Rate Changes
| Date | Rate | Change |
|---|---|---|
| Until 31 Aug 2026Current | 52.95p | Current rate (temporary 5p cut from 57.95p) |
| 1 Sep 2026 | 53.95p | +1p increase |
| 1 Dec 2026 | 55.95p | +2p increase |
| 1 Mar 2027 | 57.95p | +2p (returns to pre-March 2022 level) |
Key Facts
Tax on tax
VAT at 20% is charged on the totalprice including fuel duty. This means you pay tax on tax - the 52.95p duty alone generates an extra ~10.6p in VAT. This "tax on tax" effect is unique to fuel.
The 5p cut
In March 2022, fuel duty was cut by 5p from 57.95p to 52.95p. This temporary cut is being phased out: duty rises by 1p in September 2026, then 2p in December 2026, and 2p in March 2027.
RTFO & Green Obligations
The Renewable Transport Fuel Obligation (RTFO) requires suppliers to blend biofuels (E10 = 10% ethanol). Greenhouse gas reduction obligations and development fuel requirements add ~3-4p per litre.
Retailer margins
Forecourt profit margins are typically just 3-8p per litre. Supermarkets often run fuel at near cost to attract shoppers, while independent stations need higher margins to cover operating costs.
Sources
What Makes Up the Price of Petrol?
Every time you fill up, the largest slice of what you pay goes straight to the government. Fuel duty is currently fixed at 52.95 pence per litre -- a temporary rate that reflects the 5p cut introduced in March 2022, which is being phased out over 2026-2027. On top of that, VAT at 20% is charged on the entire pump price, including the duty itself. This "tax on tax" means the government takes roughly 55-60% of every litre you buy.
The wholesale cost of petrol and diesel is driven primarily by the price of crude oil on international markets, which is traded in US dollars. This means exchange rate movements between the pound and the dollar can push UK prices up or down independently of what happens to oil itself. Refining costs -- turning crude oil into usable motor fuel -- add another few pence per litre, and these vary with refinery capacity and seasonal demand.
What is left after tax, oil and refining costs goes towards biofuel obligations (the RTFO requires a percentage of renewable content), distribution from terminals to forecourts, and finally the retailer's own margin. That last slice is surprisingly thin: most forecourts operate on just 3-8 pence per litre, which is why supermarkets can use fuel as a loss-leader to get shoppers through the door while independents need slightly higher margins to keep the lights on.
Price Breakdown (~130p/litre)
Frequently Asked Questions
How much tax is on a litre of petrol in the UK?
At a pump price of around 150p per litre, you pay 52.95p in fuel duty plus approximately 25p in VAT -- a combined tax burden of roughly 78p, or about 52% of the total. The exact VAT amount rises and falls with the pump price since it is calculated as a percentage of the full amount including duty.
What is fuel duty and how much is it?
Fuel duty is a flat-rate excise tax charged per litre of motor fuel sold in the UK. The current rate is 52.95p per litre for both petrol and diesel, reduced from 57.95p in March 2022. This cut is being gradually reversed: duty rises by 1p in September 2026, 2p in December 2026 and a further 2p in March 2027, returning to the original 57.95p rate.
Why is diesel more expensive than petrol?
Diesel carries the same rate of fuel duty as petrol, so the price difference comes down to production costs. Diesel requires more intensive refining from crude oil, and global demand for diesel (particularly from the freight and shipping industries) has outstripped supply in recent years. The result is a higher wholesale cost that gets passed on at the pump, typically adding 5-10p per litre compared with unleaded petrol.