Motorists may soon see the return of higher fuel duty and a new pay-per-mile system, as the government looks for ways to plug the financial gap left by the move to electric and hybrid vehicles. Accounting firm RSM UK has warned that declining fuel duty revenues could prompt significant tax changes in the upcoming Autumn Budget.

HMRC figures show that fuel duty receipts between April and September 2025 totalled £12.2bn — £26m less than the same period last year. RSM UK’s Sheena McGuinness said the decline reflects the ongoing shift to electric vehicles (EVs), which, while positive for the environment, is squeezing government income. Fuel duty once accounted for nearly 7% of the UK’s tax revenue in 2019/20, but is expected to drop to just 2% by 2025/26.

With fuel duty frozen since 2011 and a 5p-per-litre cut still in effect, McGuinness said the Chancellor could reverse the reduction to help balance the books. Falling oil prices, she added, make this an opportune moment to align duty rates with inflation — a move already included in OBR forecasts.

However, McGuinness noted that restoring the 5p cut alone won’t be enough. She suggested a more lasting measure could involve a pay-per-mile tax on EVs, consolidating fuel duty, vehicle excise duty, tolls, and congestion charges into one simpler system. The Resolution Foundation has proposed linking such fees to vehicle weight, reflecting road wear, emissions, and safety impact.