Treasury loses £2.4bn of fuel duty due to lockdown

Revenue from tax on diesel sales were worst-affected, falling 49 per cent year-on-year in April and May

The Treasury lost £2.4 billion worth of fuel duty revenue in two months as a result of the coronavirus lockdown.

Fuel duty was down from £1.5 billion in April 2019, to £815 million in April 2020, and down from £1.4 billion in May 2019, to £695 million in May 2020, as drivers stayed at home in accordance with lockdown rules.

The biggest loss in revenue was from diesel sales, which saw a 49 per cent drop from £2.9 billion in April and May 2019, to £1.5 billion in the same period this year, according to HM Revenue and Customs figures analysed by the RAC. Meanwhile, revenue from fuel duty on petrol fell from £1.6 billion, to £634 million over the same period of time.

The total of £2.1 billion fuel duty taken in April and May 2020 was so low, it was similar to the monthly figure just for May 2015, which HMRC records show was £2.4 billion.

The RAC also reports that just 50 per cent of the cars covered by its telematics insurance policies were on the road during April and May 2020, which was the height of the UK’s coronavirus lockdown.

Nicholas Lyes, head of roads policy at the RAC, said: “The financial impact of coronavirus on the Government has clearly been immense. The lost revenue on fuel duty is a further blow to the public finances and, while motor traffic volumes have recovered during the summer, they are still between 10 to 15 per cent below pre-lockdown levels.

“The temptation for the Chancellor might be to recoup some of the losses by increasing fuel duty, but with the country staring down the barrel of one of the sharpest recessions on record, such a move would risk choking any economic recovery at a time when drivers and businesses are most struggling.

“This perhaps gives the Government a glimpse into the future of when fuel duty revenues start to decline more sharply with the rise of electric and other alternatively fuelled vehicles. Treasury officials might want to start thinking about how the Government approaches such a scenario considering fuel duty normally generates around £27bn a year.”

Click here for all the latest on the planned petrol and diesel car ban...

Recommended

Covid-19: what it means for motorists and the car industry
Motorway
News

Covid-19: what it means for motorists and the car industry

Everything you need to know about how Covid-19 affects cars, motorists and the car industry in the UK
6 Apr 2021
May new-car registrations up 674%
Ford Fiesta
News

May new-car registrations up 674%

Another impressive year-on-year increase for new-car registrations, but not enough to bring the market back to pre-Covid levels
4 Jun 2021
Geneva Motor Show rescheduled for 2022
Geneva
Geneva Motor Show

Geneva Motor Show rescheduled for 2022

The GIMS organisers have announced the event will return next year, after this year’s show was cancelled due to the coronavirus pandemic
28 May 2021
UK car production on the mend but not fully recovered
Production line
News

UK car production on the mend but not fully recovered

A total of 68,306 cars were built in the UK in April 2021, up 34,573 per cent from last year’s factory shutdowns, but still short of pre-Covid levels
26 May 2021

Most Popular

New 2021 Vauxhall Astra teased for the first time
Vauxhall Astra teaser 1
Vauxhall Astra

New 2021 Vauxhall Astra teased for the first time

The new Vauxhall Astra will get electrified powertrains and a more premium image
8 Jun 2021
'The hydrogen underdog disruptor is back in town'
Toyota Mirai opinion
Opinion

'The hydrogen underdog disruptor is back in town'

Mike Rutherford says hydrogen-powered cars could still be a frequent sight on UK roads
13 Jun 2021
��Our switch to electric will soon make driving manual cars a lost art'
Gearknob
Opinion

��Our switch to electric will soon make driving manual cars a lost art'

Want to drive a manual car? You need to take your test in a manual car. So what happens once all driving-school cars are automatic EVs?
8 Jun 2021
'Factories are at a standstill because they can’t get the parts to finish cars'
Car manufacturing
Opinion

'Factories are at a standstill because they can’t get the parts to finish cars'

Steve Fowler points out the fresh issues facing global car manufacturing
9 Jun 2021
New Porsche Macan facelift prototype review
Porsche Macan prototype - front
Porsche Macan

New Porsche Macan facelift prototype review

We get behind the wheel of a prototype version of the facelifted Porsche Macan SUV
13 Jun 2021
Volkswagen Golf GTI Clubsport vs Cupra Leon 300
Volkswagen Golf GTI Clubsport vs Cupra Leon 300
Car group tests

Volkswagen Golf GTI Clubsport vs Cupra Leon 300

The capable Volkswagen Golf GTI Clubsport goes up against its new Cupra Leon 300 sibling in this hot hatch battle
12 Jun 2021
UN report highlights ethical problems with electric cars
Electric car charging
News

UN report highlights ethical problems with electric cars

Analysis reveals lithium refining takes 65 per cent of Chilean region’s water, while 40,000 child miners dig for cobalt in DRC
14 Jun 2021
New Vauxhall Astra prototype review
Vauxhall Astra prototype - front
Vauxhall Astra

New Vauxhall Astra prototype review

A new Vauxhall Astra is on the way and we've driven a prototype ahead of its official arrival
14 Jun 2021
New 2021 Tesla Model S Plaid launched with 1,006bhp
Tesla Model S facelift - front
Tesla Model S

New 2021 Tesla Model S Plaid launched with 1,006bhp

Range-topping version of the Tesla Model S officially unveiled, with a sprint time of 0-60mph in less than two seconds
10 Jun 2021
New 2021 Volkswagen T7 Multivan replaces Caravelle
Volkswagen T7 Multivan - front
Volkswagen Caravelle

New 2021 Volkswagen T7 Multivan replaces Caravelle

The Volkswagen T7 Multivan MPV switches to the MQB platform and adds plug-in hybrid technology
10 Jun 2021
New Skoda Enyaq iV 2021 review
Skoda Enyaq iV 80 Sportline - front
Skoda Enyaq

New Skoda Enyaq iV 2021 review

The new Skoda Enyaq iV is the Czech firm’s first bespoke electric car and we've tested the full range on UK roads
10 Jun 2021
New 2021 Lexus NX arrives with firm’s first plug-in hybrid drivetrain
Lexus NX - front action
Lexus NX SUV

New 2021 Lexus NX arrives with firm’s first plug-in hybrid drivetrain

The new Lexus NX 350h features a standard hybrid set-up, while the NX 450h+ gets a plug-in hybrid powertrain capable of 40 miles of pure electric powe…
12 Jun 2021
'GM taking over Honda would be a disaster'
Honda opinion
Opinion

'GM taking over Honda would be a disaster'

Mike Rutherford is worried about Honda's future, despite its recent motorsport success
6 Jun 2021
Audi updates line-up for 2022 with new tech and trim features
Audi S5
Audi

Audi updates line-up for 2022 with new tech and trim features

Almost every car in Audi’s line-up has received a tweak, with major updates including Amazon Alexa integration and a Sonos stereo
11 Jun 2021