Chancellor Rachel Reeves’ planned 5p‑per‑litre fuel duty increase, set to take effect in September, will raise the average tax on diesel to 91p per litre – the highest level across Europe. Petrol drivers, already paying the 12th‑highest tax, will jump to the eighth‑most taxed nation after the hike.

Diesel tax to hit 91p per litre , topping Europe

The RAC Foundation’s latest study finds that UK diesel drivers currently shoulder an average of 85p in tax per litre, second only to Denmark’s 88p. Once Reeves’ duty rise is applied, that figure will climb to 91p, overtaking all continental rivals.

This surge would make the United Kingdom the most heavily taxed diesel market on the continent , a status that could ripple through logistics costs and consumer prices.

Petrol duty rise pushes UK to eighth‑highest in EU

Petrol drivers pay roughly 79p per litre in tax, placing them 12th among 29 European countries surveyed. The additional 5p duty will lift the tax burden to 85p, moving the UK into the top‑ten, specifically the eighth‑most taxed.

While still behind nations such as Germany and Denmark, the jump signals a broader shift in the UK’s fuel‑tax landscape,poteentially influencing cross‑border travel and freight decisions.

Reeves' VAT windfall of £500 million fuels political pressure

According to the analysis, the surge in pump prices – driven in part by the Iran‑related oil market shock – has generated an extra VAT windfall of nearly £500 million for the Treasury in under three months.

This unexpected revenue has intensified calls on Reeves to reverse the unpopular 5p increase, with critics arguing the windfall could offset the duty hike without burdening motorists .

What the RAC Foundation analysis leaves unclear

The study does not break down how the additional tax will be allocated, nor does it explain whether any of the £500 million VAT surplus will be earmarked to mitigate the fuel duty rise.

Furthermore, the analysis omits regional variations in fuel consumption, which could mean the average tax impact differs significantly between urban and rural drivers.

Who will bear the cost of higher fuel taxes?

While the headline figures focus on diesel and petrol, the broader transport sector – including buses, trucks, and deivery services – will also feel the pinch, potentially passing costs onto consumers.

Industry groups have warned that higher operating expenses could translate into increased freight rates,adding pressure to an already inflation‑sensitive economy.