Fuel duty is becoming a shrinking source of Treasury income as more drivers switch to electric and hybrid vehicles. HMRC’s latest figures show that from April to August 2025, fuel duty raised £10 billion, down £100 million compared with the first five months of the previous year and £378m lower over 12 months.
In August alone, receipts stood at £2bn, compared with £2.05bn in August 2024. This fall is striking given that the summer holiday is usually one of the busiest periods on the roads.
The decline has been driven by the gradual move away from diesel and the long-standing freeze on the fuel duty rate. With Government plans to phase out new petrol and diesel car sales as part of net-zero targets, the downward trend looks set to continue. The Office for Budget Responsibility forecasts fuel duty will account for just 2% of total revenues in 2025/26, down from nearly 7% in 2019/20.
By contrast, most other tax streams are rising. Overall receipts from April to August reached £364.6bn, up £22.1bn year-on-year. Income tax, national insurance, and capital gains tax rose by £20bn alone, mainly due to fiscal drag.
Inheritance tax also continues to rise. While August receipts dipped to £658m, compared with £844m the previous month, the year-to-date figure hit £3.7bn. The yield is expected to grow as more estates become liable and pension wealth comes into scope.
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