How Petrol Prices Are Calculated in the UK

Roughly half of what you pay at the pump is tax. On a litre of unleaded at the current UK average of 161.2p, fuel duty takes a flat 52.95p and VAT takes another 20% of everything else. The crude oil itself is usually the smaller share. That is why pump prices move far less than oil prices do, and why two forecourts a mile apart can differ by 10p when they are paying the same duty.

What you actually pay for in a litre of petrol

A litre of fuel is four things stacked on top of each other: the product, duty, the retailer's margin, and VAT charged on the total. Only one of those moves daily.

Duty and VAT together come to 79.9p - just under half the pump price. Duty is a fixed amount per litre, not a percentage, so it does not rise when oil does. VAT is a percentage, so it amplifies everything beneath it: every 1p added to the wholesale price becomes 1.2p at the pump.

Fuel duty has been frozen since 2011

The main rate has sat at 57.95p since 2011, with a temporary 5p cut applied in March 2022 that has been extended at every fiscal event since, leaving the effective rate at 52.95p. See HMRC's hydrocarbon oils bulletin for the current rate.

Why the pump lags the oil price

When crude falls 10%, petrol does not. Duty is unchanged, VAT is a percentage of a now-smaller base, and the fuel in the tanks under the forecourt was bought weeks ago. A large fall in crude typically shows up as a few pence at the pump, several weeks later.

The Competition and Markets Authority found this lag is asymmetric in practice - prices tend to rise faster than they fall, a pattern often called "rockets and feathers". Its road fuel market study led directly to the open data scheme that supplies the prices on this site.

Why the retailer's share is the part you can control

Duty and VAT are identical at every forecourt in the country. Wholesale costs vary a little by region and delivery distance. What genuinely differs is the margin each site chooses to take - and that is where the variation you see on a price comparison actually comes from.

Across the 7,986 stations we track with current prices, the cheapest unleaded is 132.9p and the average is 161.2p. The gap between the cheapest and dearest major brand is 11.2p a litre, from Costco at 153.7p to Shell at 164.9p. None of that is explained by tax.

You can see the current standing of every chain on our fuel prices by brand table, or check petrol and diesel prices across the UK by region and town.

Diesel is taxed the same but costs more

Diesel carries exactly the same 52.95p duty as petrol. Yet the UK average for diesel is 182.4p against 161.2p for unleaded - a premium of 21.2p a litre. That difference is entirely wholesale and refining: diesel demand is driven by freight and is more exposed to global distillate markets than petrol is.

Frequently asked questions

How much of UK petrol is tax?

About 49.6% at a pump price of 161.2p - 52.95p of duty plus 26.9p of VAT. The proportion falls as pump prices rise, because duty is a flat amount rather than a percentage.

Do I pay VAT on fuel duty?

Yes. VAT is charged on the total including duty, so you pay tax on a tax. That is why the effective tax share is higher than the duty figure alone suggests.

Why did my local station not drop its price when oil fell?

Forecourts sell fuel they bought weeks earlier, and duty and VAT do not move with crude. A fall in oil usually reaches the pump slowly and partially. If a nearby station has dropped and yours has not, that is a margin decision rather than a cost one - which is exactly what comparing prices reveals.

Is fuel cheaper in some parts of the UK?

Yes, though less than people assume. Delivery distance and local competition both matter, and areas with a supermarket forecourt nearby tend to be cheaper. You can compare by region and town.

Figures updated 29 August 2026. Price data is taken from the 7,986 UK forecourts we track through the CMA's open fuel price scheme, refreshed throughout the day. Duty rates are from HMRC. Component shares are approximate: wholesale and margin move daily and are inferred from the pump price once duty and VAT are removed.