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A freeze on fuel duty, a levy on vapes and a reduction in National Insurance were announced at today’s Budget

Forecourt operators have broadly welcomed today’s Budget which has delivered no nasty surprises, some wins, and some missed opportunities for the industry.

Significantly, fuel duty has been frozen for another year. It has been fixed at 57.95p since March 2011 and was temporarily cut by an extra 5p in 2022 by Rishi Sunak, Chancellor at the time. It was set to run out last year before being extended, but now Chancellor Jeremy Hunt has extended it again for another 12 months, saving, he said, the average car driver £50 next year.

A new levy on vaping from October 2026 was also announced in this Budget, the last one before an election later this year. Vaping has been having image problems with under-age purchases of the cheaper and soon to be banned disposables hitting the headlines, as well as falling foul of environmentalists, who blame the devices for adding to plastic waste.

Vaping products have been subject to VAT, but, unlike tobacco, they are not separately taxed. The new tax rates - likely to be based on each product’s nicotine content, will be subject to consultation.

The Chancellor also announced that there will be a one-off tobacco duty increase - £2.00 per 100 cigarettes or 50 grams of tobacco - from 1 October 2026. 

On the vaping levy, the Association of Convenience Stores (ACS) chief executive James Lowman, said: “Retailers are trying to prepare for multiple changes to the regulation and taxation of the vaping category: a ban on disposables expected to come into effect in April 2025, a variety of as yet undrafted regulations on the siting and marketing of products, and now the introduction of duty on vape sales from 2026.

”We will work with the government to try and make these various measures coherent and effective, but retailers will be feeling confused about the purpose and implementation of these regulations.”

Alcohol duty, which was due to rise by 3% from August, has been frozen until February 2025.

Another widely predicted announcement was the 2p cut in National Insurance to be introduced in April.

The ACS welcomed the measure, alongside a reduction in the child benefit threshold from £50,000 to £60,000, which it said would encourage more people into the sector, which was contending with an “incredibly tight labour market”.

However, it says it would have liked clarity on the future of the National Living Wage, to help retailers prepare for expected rates in 2025 and beyond.

Another welcome announcement is that the government will allow full expensing on leased assets. Victoria Price, managing director at Alvarez & Marshal Tax, said: “Many businesses simply can’t afford the outlay of expensive equipment up front. Leasing is a cost-effective way for UK businesses to acquire assets.  

“This will also allow flexibility to ensure that UK businesses can keep upgrading to cutting edge technology and green technology without having to buy assets outright so could pave the way to keep us on the front foot in that regard also.”

Also, the VAT registration threshold for businesses is to rise from £85,000 to £90,000.

But the Chancellor ignored calls for incentives for motorists to purchase electric vehicles. Richard Roberts managing director of Trident Honda in Ottershaw, which runs a forecourt and a car dealership, said he was disappointed.

“We have a situation where the government is supposedly pushing and promoting EVs but does nothing in this Budget as far as I can see so far towards this,” said Richard.

“We need to redress the situation. If you are replacing gas boiler with a heat pump you are not charged VAT, and if motorists are charging on a forecourt only they will be paying a similar price to filling up with petrol, so there is no incentive there. Equalising VAT for on-street EV charging to match domestic energy rates would have been a great first step,” he said.

”The government has reduced the pressure on consumers to buy electric by putting back the ban on buying new  petrol and diesel vehicles to 2035, but has put all the pressure on the industry to deliver on sales with no help.”

Gordon Balmer, executive director at the Petrol Retailers’ Association (PRA), said that that while he was pleased that the Chancellor had listened to the PRA’s calls for an extended freeze on fuel duty, he was disappointed he had not taken the opportunity to reduce business rates.

”With rates due to rise to an all-time high of 54p in the pound in April, petrol retailers face further financial strain. The proposed rise in business rates will only exacerbate the increasing costs petrol retailers have had to endure in recent years.

“The PRA remains committed to engaging with the government to ensure continued support for petrol retailers,” he said.

Seb Hawtree, a director at forecourt operator and a director at Hawtree & Sons Riverside Garage in Dorset, said that he had seen the vaping tax coming. “I’m surprised to be honest that it wasn’t introduced earlier. We knew that it would come at some point,” he said.

Forecourt operator Ben Lawrence, director at Lawrences Garages, said that while he welcomed the freeze on duty, he felt more could have been done to support the sector: “All retailers continue to manage increases in wages, energy and rates. While having to tackle crime on our own, investment is desperately needed to police our streets to cut crime on our forecourts, and inside our shops,” he said.

And Ben believes that taxing vapes is misplaced: “The government adding a vape tax will just be passed onto all customers from the date the government implement it,” he said.

”This will result in a decrease to people who are trying to stop smoking, which currently puts a huge burden on the National Health Service.

”Legislation would be the better way of tackling the increase in young people vaping, stopping anyone selling vape products. In a time where we are trying to encourage people to stop smoking this will only increase the black market, or help customers carry on smoking.”