A new survey has revealed that more than a third of UK motorists remain unclear about how much tax they pay on fuel, highlighting a persistent gap in public understanding at a time of rising prices and growing political pressure on the Labour government’s energy and taxation policies.
The research, conducted by PetrolPrices.com between 20 and 26 March 2026, surveyed 575 regular users of its platform. Respondents were asked a straightforward question: how much of a typical £1.50 per litre fuel price is made up of tax?
While 63% correctly identified that between 50% and 60% of the pump price goes to tax, a substantial 37% either underestimated the figure or admitted they did not know. Among those who answered incorrectly, 23% believed tax accounted for less than half of the price, while 7% thought it was as low as 1–20%. A further 7% said they were unsure.
The findings underscore a broader disconnect between motorists’ everyday spending and their understanding of how fuel pricing works. Despite fuel being one of the most frequent household expenses, many drivers remain unaware that more than half of what they pay at the pump goes directly to the Treasury through fuel duty and VAT.
One respondent was blunt in their assessment: “The Treasury is a major beneficiary of the oil crisis. This is unacceptable, and the Government will stand or fall at the next general election on how it deals with the situation.”
Mounting Criticism of Labour’s Approach
The data is likely to intensify criticism of the Labour government, which has so far resisted significant structural changes to fuel taxation, while simultaneously restricting new North Sea oil and gas developments.
Critics argue that this combination of high taxation and constrained domestic supply is exacerbating costs for consumers. With wholesale fuel prices rising, the tax burden has become even more visible in absolute terms, even if many motorists still fail to fully grasp its scale.
Industry voices and campaigners are increasingly calling on ministers to reverse course and approve new North Sea oil and gas licences, arguing that boosting domestic production could ease supply pressures and reduce reliance on imports. Without such measures, they warn, the UK risks locking itself into persistently high fuel costs, while the Treasury continues to benefit from elevated tax receipts.
Fuel Duty vs VAT, a Policy Divide
The survey also comes amid ongoing debate over how best to deliver relief to motorists. While fuel duty cuts are frequently proposed, experts note they may not translate immediately into lower prices at the pump. Because duty is applied earlier in the supply chain, reductions can be unevenly felt and may favour larger, high-turnover retailers over smaller independent forecourts.
By contrast, a temporary VAT cut is seen as a more direct and transparent mechanism. Applied at the point of sale, any reduction would be immediately visible to consumers, and more consistently passed on across different types of fuel retailers.
Calls for Greater Transparency
The findings have also prompted calls for clearer pricing transparency. Suggested measures include itemised receipts showing the tax breakdown, pump displays highlighting duty and VAT components, and forecourt signage summarising how prices are constructed.
Such steps, proponents argue, could help close the knowledge gap identified in the survey and ensure motorists better understand where their money is going.
A Growing Disconnect
Ultimately, the research points to more than just confusion, it reflects a wider disconnect between government policy, market dynamics, and public awareness. Even among regular drivers, understanding of fuel pricing remains limited.
With over a third of motorists misjudging one of the most significant components of their fuel costs, that gap is unlikely to close without greater transparency, and, critics argue, a fundamental rethink of current policy.
As pressure builds, the Labour government faces a difficult balancing act. But with fuel costs remaining politically charged, failure to address both taxation and supply, particularly through reopening North Sea licensing, may prove increasingly costly at the ballot box.
Find out more what makes up the price of fuel here.
