So, we know that fuel is expensive, more so since the covid era, but have you ever looked at how much of the price is tax. More importantly, how much of it is “tax on tax”? On a list of 170 countries, the UK charges more for fuel than 141 of them. In our price which averages 145.24p/litre today, a whopping 53% of it is tax.
On every litre of fuel we purchase, the Government apply fuel duty of 52.95p. Once we hit the forecourt price we are also paying the additional 20% VAT and rather shockingly, the VAT applies to the total net price including fuel duty, so we pay 20% of 52.95p or 10.59p/litre purely as a “tax on tax”.
So what does that mean to the UK SME Community?
We’re working with some averages and examples here but if you would like to share your costs and travel profile with us we will happily expand this to feature our Member’s specific costs and issues.
Let’s take an example of a Mobile Vehicle Detailer running one van and covering 80 miles per day at an average 30MPG, that’s 12 litres per day or 264 per month. At today’s average of 145.24p/litre that’s a cost of £383.43 per month of which £203.70 is the total tax and £27.96 is tax on tax.
For a small taxi firm operating 10 vehicles, averaging 30mpg and doing 100 miles per day/vehicle and we see total tax generated of £3506.77 and tax on tax of £481.32.
McDevitt Roofing in Christchurch, Dorset operate 3 vehicles and spend £528 per month on fuel, they generate a total tax of £280 of which £38.50 is tax on tax.
For 2025, the Office for Budget Responsibility forecasts £24.4 Billion in fuel duty and the vat on top of that being another £4.8 Billion of TAX on TAX.
How does that make you feel?
See what Andrew Wade of Logical Politics says on the subject: