Hydrocarbon oil duty

Hydrocarbon oil duty (also fuel duty and fuel tax) is a fuel tax levied on some fuels used by most road motor vehicles in the United Kingdom; with exceptions for local bus services, some farm and construction vehicles and aviation, which pay reduced or no fuel duty.

The government revenue from fuel duty was £27.1 billion for the financial year 2014-2015. This is an increase in cash terms in comparison to 2013-2014 but now only represents 1.5% of GDP. This is in contrast to the start of the 2000s when it was 2.3% of GDP. A further £3.9 billion is raised from the VAT on the duty, contributing some 3.5 per cent of total UK tax revenues. The Fuel Price Escalator, which was introduced in 1993 was abandoned after the disruptive fuel tax protests of 2000.

The Finance Act 1908 introduced a petrol duty in the UK, with the rate being set at 3d (£0.013) per UK gallon, bringing the price of a typical UK gallon to 1s 1½d (equivalent to £6.12 in 2015).

It was then abolished by the Finance Act 1919 after several years of steady petrol price rises and replaced by vehicle taxation, and the tax disc based on horsepower, after which the cost of petrol was about 4s (equivalent to £8.29 in 2015) per UK gallon.

In 1928, following market reductions in the cost of a UK gallon of fuel to about 1s 2½d (equivalent to £3.28 in 2015), the Government introduced a tax of 4d (£0.017) per UK gallon bringing the cost of a UK gallon of petrol to 1s 6¾d (equivalent to £4.24 in 2015).

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