While we’re all struggling with ever increasing fuel prices, the government is actually benefiting from each price hike in the firm of VAT. This petition is specifically relating to fuel charges, however, aside from essentials that are largely VAT free, many of our purchases that are increasing in price are benefitting the government. 

At home, we pay an additional 5% VAT on our gas and electric.  In 2021, the average combined gas and electric bill was £111.60 earning the government £5.31 per month per household. 

It is anticipated that the next price cap increase will take the average annual household energy bill to £2980 in October 2022, meaning a monthly bill will average £248 per month,  but many will be paying much more than this.  The tax that the government will receive on this will be £11.81.  Whilst this doesn’t represent a huge amount of money individually, when you multiply it by a projected 27.8 million households in the UK, this brings the government an additional £2.17 billion per year. 

Vehicle fuel represents a much larger tax benefit to the government. Most people don’t  realise that while fuel duty was frozen at 0.5295 per litre for petrol and diesel in March 22, there is VAT @ 20% payable on top of that (11.13p).  Overall, price increases at the pumps are swelling government coffers.  In July 2021, unleaded was selling at £1.30 per litre 0.217 in VAT, at the start of July 22, unleaded averaged £1.91 per litre (0.318 in VAT). The average UK car holds 50l of fuel, that means that each time we fill up we’re paying £5.05 extra in tax.

There are 32.5 million cars on the road in the UK, if each of these cars filled up just once, the government would receive £164.12 million in additional income compared to what they were receiving this time last year. The average car uses 831 litres per year an extra £83.93 in tax per person. 

Of course, it’s not just tax on the general public that is impacting on finances, businesses are being similarly affected and of course are have to pass on their price increases to the end user, resulting in inflation at 9.1%, the highest since 1991, when VAT was increased to 17.5%, (VAT is currently 20%)

This petition is to the UK Chancellor, Rishi Sunak to reduce the VAT impact on household fuel, remove the tax on tax implications at the pump and return to 17.5% standard rate VAT for all vatable purchases in the UK.