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Fuel duty rise & the cost of motoring

On the 1st September UK fuel duty is to rise by £0.02/litre to £0.5619/litre (on both unleaded petrol and diesel). Currently, both fuels are available in the West Midlands for £1.029/l (US $6.28/US Gal) pump price. The final pump price includes VAT (currently temporarily cut to 15% from 17.5%), which is applied to the price including the fuel duty.

I'd like to take this opportunity to outline how this taxation adds up, over a year, for the typical car or lorry (semi-truck, for Americans).

Note: Today's GBP-USD exchange rate is $1.6266/£1. 1 UK gallon is 4.55 litres. 1 US gallon is 3.75 litres. All 'gallons' are UK gallons unless otherwise stated.

Cars:

I'll assume an 'average' car to be a 1.6 Ford Focus (petrol), which I am reliably informed achieves an average of 37mpg, and travels 12,000 miles per year.

Per year, this car will use 324 (UK) gallons of petrol, which at 4.55L/gallon comes to 1,476 litres. At 1.049p/litre (next week's price), this comes to £1,548.32 annual fuel cost ($2,518.50). The fuel duty (tax) alone comes to £829.36 ($1,349.04). The VAT (at 15%) is £201.95. The actual tax-free cost of the fuel is £517.01 (or 35p/litre, or $2.14/US Gal). Depending on which way you like to look at it, this means that 66% of the pump price is tax, or that fuel is taxed at a rate of 200%.

For those who prefer a per-mile figure, fuel comes to 12.9p/mile, fuel taxes are 8.5p/mile and untaxed fuel is 4.4p/mile.

Added to this is the annual Vehicle Excise Duty (commonly known as "road/car tax") which for this car is £150/year. This tax is levied, basically, on the official fuel consumption of the car (full details here) and for some cars (with the worst fuel economy) can be up to £405/year.

In total, running this car costs £1,181.31 in (fuel and road) tax alone, per year.

Lorries/trucks:

For these calculations, we'll assume a 40-tonne (gross) articulated lorry, travelling 60,000 miles per year at an economy of 10mpg.

Gross mass is the maximum combined mass of the vehicle and load combined. The 60,000 mile per year figure is from page 8 of this. 10mpg is an optimistic figure for a 40-tonne lorry, and is a fudge based on the economy of a lorry that I know very well. I have seen figures claiming average economies as low as 6.7mpg, but I'll assume 10, which makes the tax figures following lower than in reality.

At 10mpg this lorry will consume 6,000 gallons (27,300 litres) of diesel per year.  At pump price, this comes to £28,637.70 /year. Of course, (most) businesses reclaim VAT so a more accurate figure is the VAT-free cost of £24,902.35/year. The fuel duty alone comes to £15,339.87 per year.

Do you want some per-mile figures as well? Pump prices: 47.7p/mile, VAT-free: 41.4p/mile, fuel duty only: 25.6p/mile, untaxed fuel: 15.8p/mile.

There is VED to pay as well, for this lorry it's £1,850 per year.

In total, in fuel tax and VED alone, this lorry costs £17,189.87 per year in tax.

For both vehicles, annual testing fees, maintenance and other costs are extra. The lorry costs do not include the cost of (and taxes on) the driver, depot, safety compliance, etc etc etc.