What the Autumn Budget could cost your fleet from January

By Mark Skellum, Partner & CFO

‍

The 5p fuel duty cut that has been in place since 2022 is frozen until 31 December. On 28 October, the Chancellor decides what happens from January. That decision will land on your cost base quickly, and with diesel now averaging more than £2 a litre, and higher still at many forecourts, it is worth working out your exposure now rather than waiting for the announcement.

Where things stand

The 2025 Autumn Budget set out a plan to unwind the 5p cut in three stages through the winter. In May, under pressure from the Road Haulage Association and Logistics UK, the government backed down and extended the freeze to the end of the year. A VED holiday for heavy goods vehicles was announced at the same time, worth up to £912 per vehicle at next renewal.

That is the good news side of the ledger. The other side is that what happens from January remains entirely open, and the October Budget is where it gets decided. The RHA is heading into that Budget actively lobbying for the 5p cut to be kept, or for an essential user rebate similar to the arrangements in France, Spain, and Italy. Whether either happens, fleet operators should understand what the scenarios look like in their own cost terms.

What the scenarios mean for your fleet

The RHA estimates that a 5p per litre increase adds around £2,325 annually to the fuel bill of a single lorry. The precise number varies by fleet type, duty cycle, and mileage. The shape of the scenarios is straightforward:

• The current plan: duty rises by 3p on 1 January and a further 2p on 1 March 2027, bringing the full 5p back by spring. For a fleet of 30 lorries, that is a potential fuel cost increase in excess of £69,000 a year. For a fleet of 60, over £139,000.
• A different schedule set at the Budget: the Chancellor could change the timing or the size of the increases, which is why the numbers are worth modelling now rather than after 28 October.
• Freeze extended or cut retained: the outcome the industry wants, but not one to build cost planning around until it is confirmed in the Budget.

The base position is that diesel at more than £2 a litre is already well above where it was when most long-term and fixed-rate contracts were agreed. The duty question sits on top of a cost line that is already under strain.

‍

"The fuel duty question is not settled. But the exposure is calculable today, and the conversations that need to happen before January will be harder to have after the Budget than before it."

‍

What to do before 28 October

There are practical steps fleet operators can take now, before the Budget settles the question

• Review which contracts have fuel escalation clauses and which do not. Fixed-rate contracts that predate 2025 are the most exposed. If renewal is coming up in Q1 2027, that conversation with the customer needs to start now, not after the announcement.
• Model your fleet fuel cost at 3p, 5p, and no increase per litre. The numbers take ten minutes to run and give you the range you are working within. Knowing your exposure across scenarios is more useful than waiting to react to the one that actually happens.
• Look at fuel purchasing arrangements. With diesel above £2 a litre, the spread between pump and card-rate forecourts is wider than it was a year ago. If your drivers are filling at pump price on domestic work, there is likely margin being left on the table.

The broader picture

The industry has been here before. The 2022 cut was introduced quickly, in response to a cost spike, and has been extended repeatedly since. That pattern does not mean it gets retained again in October. What it does mean is that the timeline between a Budget announcement and the point at which costs change tends to be short. Fleet operators who have done the maths in advance are better placed to move on pricing, contracts, and supplier conversations when the decision lands.

The Budget is two weeks away. That is enough time to do the work.

If you want to work through what the fuel duty scenarios mean specifically for your fleet's cost base, I am happy to have that conversation. You can find out more about how we work with haulage businesses at ballardsllp.com/haulage-and-logistics.

This article has been prepared for information purposes only. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.

‍