Nearly half the UK pump price is tax
UK fuel duty stands at 52.95 pence per litre for both petrol and diesel, a rate that has been frozen since 2011 following various government decisions. On top of this, VAT at 20 % is applied to the total price including duty. Together, tax accounts for roughly 45 to 50 % of the pump price -- lower than France (55 to 65 %) but substantially higher than the US (around 15 %).
This fixed duty component means UK fuel prices are less volatile than US prices when crude oil moves: the tax floor prevents the kind of sharp swings seen at American forecourts.
Calculate the cost of any journey with the fuel cost calculator.
HMRC mileage allowance: what you can actually claim
If you use your own vehicle for work journeys, HMRC allows you to claim a mileage allowance of 45p per mile for the first 10,000 miles in a tax year, then 25p per mile beyond that. This covers fuel, wear and tear, insurance, and depreciation -- but not tolls, which can be claimed separately.
For electric vehicles, the approved mileage rate is 9p per mile (Advisory Electric Rate as of 2024), though many employers pay a higher rate. If your employer pays less than the HMRC rate, you can claim the difference as a tax-deductible expense through self-assessment.
What fuel cost alone does not capture
The full cost per mile of car ownership typically runs at 40 to 70p per mile when you account for depreciation, insurance, servicing, tyres, and parking -- not just fuel. A car covering 10,000 miles a year often costs £5,000 to £7,000 annually in total, which is why the HMRC 45p rate exists to reflect the full picture.
For commutes under 10 miles each way, cycling, the bus, or a train often works out cheaper once you include parking and the full vehicle cost.