Petrol Tax and Diesel Tax is a common discussion especially as many other countries pay much less than the UK to run their vehicles. Following the pre budget report on the 24th Nov 2008, a reduction of 2.5% on Value Added Tax (VAT) was announced and this was put into force on the 1st Dec 2008. However to offset this deduction Duty on fuel was increased by 2p per Ltr.
How Much Tax is on Petrol
Currently we pay 52p per Ltr in Duty on petrol and 55p per Ltr on Diesel plus 15% VAT.
So, how will this affect you in what you pay on at the petrol stations? Well, as of the 1st December 2008 we will have seen a 0.5p per Ltr rise on the cost of fuel, meaning that if it takes 40 ltrs to fill your tank, then the overall cost will be up by about 16 pence.
This in itself might not seem too bad, especially as we have recently seen a drop in fuel prices and so we are probably not as concerned as we would have been 3 months ago, but you must keep in mind that the additional 2p per Ltr is a permanent increase and it has been announced today (19th March 2009) that Duty on Fuel will be increased again on 1st April 2009 by another 2 pence per Ltr. Being as the VAT reduction is only for 13 months, this means that on the 1st Jan 2010 we will see another automatic increase on our fuel and due to this many of us are looking at ways to become more fuel efficient, buying cars with lower CO2 Emissions to reduce our Road Tax Costs.
The statistic which will probably surprise you the most is that if the Chancellor decided to drop VAT and Duty Tax on Petrol and Diesel, we would be looking at only paying around 26p per ltr!