Fuel duty stays cut until mid-2027, then jumps 15% for hauliers

UK fuel duty will jump from 52.95p to 60.59p per litre on 1 July 2027, adding £7,640 in duty before VAT to every 100,000 litres hauled, after Chancellor John Healey's Budget 2026 extended the current 5p-per-litre cut only until 30 June 2027.

Delivering the statement on 28 October, Healey retained the temporary cut and deferred inflation uprating, saying the extension would run "through the winter and spring to July, supporting households, hauliers and farmers".

Ben Fletcher, chief executive of Logistics UK, welcomed the move. "The government's decision to retain the 5p per litre cut in fuel duty is a wise decision which will help keep trade moving, support growth across the economy and avoid adding further inflationary pressures," he said.

The relief is explicitly temporary. When it lapses, the 5p cut ends and inflation uprating takes effect simultaneously. Richard Smith, managing director of the Road Haulage Association, called for a 15p-per-litre rebate for essential users, arguing transport businesses still face severe cashflow pressures.

What happens to warehouse costs?

Larger industrial property gets dearer. Warehouses remain largely outside the new high-street relief, while England's multiplier for properties with rateable values of at least £500,000 rises from 50.8p to 52.5p from April 2027.

The government also extended the 1p Transitional Relief Supplement — a surcharge on some business rates bills — for two further years from April 2027, applying where bill increases fall below the relevant relief caps.

John Scully, director of Sixteen Real Estate, backed the targeted retail, hospitality and leisure support but said industrial occupiers had been overlooked. "You cannot protect the shopfront while ignoring the warehouses behind it," he said.

The wage floor climbs too. The National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027, adding directly to warehouse payroll costs.

How will operators staff up?

Recruitment support comes through expanded apprenticeship brokerage, growing from seven to 14 mayoral areas in England. The scheme connects 16- to 24-year-olds with vacancies and helps employers create opportunities.

Tom Ashley, chief executive of International Logistics Group and Global Freight Solutions, welcomed it. "You don't need a degree to build a successful career in logistics. It is a sector where warehouse to boardroom is a reality not a slogan," he said.

Which import costs ease?

Food importers get breathing room. Tariff suspensions apply to 101 agri-food products — including baked beans and chocolate — from 26 November 2026 until 31 December 2028. VAT and trade remedy duties are unaffected.

Packaging tax rules tighten earlier on two fronts. From April 2027, previously announced rules require certified mass-balance accounting for chemically recycled content, and pre-consumer waste stops counting towards the Plastic Packaging Tax recycled-content threshold. From 1 April 2030, mechanically recycled content used to claim the exemption will need certification, changing the evidence businesses must obtain from suppliers.

What changes for invoicing and online sales?

Mandatory VAT e-invoicing arrives 1 April 2029 under the roadmap first announced in 2025. Structured data exchanged between financial systems is required; emailing a PDF alone will not comply. Technical requirements land between October 2027 and April 2028. A separate consultation on sharing invoice data with HMRC did not add a reporting requirement.

Marketplaces face an earlier shift. From October 2027 they become responsible for VAT on qualifying UK sellers' goods located in the UK — covering VAT-registered sellers and unregistered sellers exceeding £90,000 annually on an individual platform. B2B, personal and second-hand goods sales are excluded; existing registration obligations stay unchanged.

Post Office chief executive Neil Brocklehurst highlighted plans to expand parcel services, upgrading 600 branches and targeting up to 1,000 new multi-carrier self-service drop boxes by the financial year's end.

Where does investment relief land?

Plant and machinery allowances shift in timing. The main-rate first-year allowance rises from 40% to 50% on new, unused equipment from 1 January 2027, while the main writing-down allowance falls from 14% to 12% from April 2027. Deductions come forward faster; the pool burns down slower. Full expensing and the Annual Investment Allowance remain available where eligible.

Energy support is narrow. The British Industrial Competitiveness Scheme offers eligible GB manufacturers electricity savings of up to 25% from April 2027 — but standalone logistics operations do not qualify merely for serving manufacturing supply chains.

EV spending is residential-focused. The government committed £100m over two years from spring 2027 to cut costs at local, lower-powered public chargers in Great Britain, targeting home charging rather than depot installations. Plans to prioritise strategic electricity connections do not automatically cover warehouses or depots.

Gareth Anderson, head of business management at Allica Bank, backed the fuel duty extension but pressed for more. "Established logistics firms keep supply chains moving but need manageable costs and access to finance to invest," he said.

For hauliers, the arithmetic is stark: two years of frozen duty, then a 15% increase, higher rates multipliers and a £13.21 wage floor arriving within months of each other.