CHANCELLOR Rishi Sunak could slash fuel duty in the Budget this week as prices at the petrol pumps soar to record highs.
In an effort to stop filling up cars from being “prohibitively expensive”, he is expected to unveil the cost cutting action this Wednesday.
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Mr Sunak told the BBC that he was prepared to step-in to help Brits battling the cost of living crisis.
To do so, the Chancellor could temporarily cut fuel duty by as much as 5p per litre.
The Russian invasion of Ukraine has already pushed fuel prices to record highs amid concerns about oil supply.
It is hitting motorists at the pumps, and has brought the average cost of filling up a family car to an eye-watering £90.
Average prices are at a record 165.9p for petrol and 177.3p for diesel.
Drivers already pay 57.95p a litre in tax on their fuel – which has been frozen in recent years.
Fuel duty and VAT make up 52% of the cost of petrol, so a cut announced in this week’s Budget could make a dent in helping offset the overall rise in costs.
The 5p cut could mean a £2 saving on the average car tank.
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Myron Jobson, Senior Personal Finance Campaigner at interactive investor, said: “The price of fuel is an escalating problem that needs to be addressed.
“Figures by the Department for Business, Energy & Industrial Strategy revealed the cost to fill a typical 55-litre fuel tank has spiked by around £17 more than a year ago to £87.21 for diesel and £84.12 for petrol.
“The Chancellor could intervene by reducing fuel duty. A VAT charge is also applied on both the product price and the duty – which is essentially tax on tax. He could cut fuel duty or lower VAT or do both.”
The Chancellor has been told to act after France slashed 12p off a litre of petrol, and Ireland followed with 17p.
But the fuel duty cuts might not be the only thing to come out of Wednesday’s announcement.
There were also reports the Chancellor is considering raising the threshold at which people start paying national insurance.
Prime Minister Boris Johnson announced a 1.25 percentage point National Insurance rise last summer that is due to come into effect in April.
But The Budget announcement could take an estimated 150,000 people out of paying next month’s planned hike.
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