MaxGhenis · Oct 28, 2026
diff --git a/changelog.d/ab26-fuel-duty.changed.md b/changelog.d/ab26-fuel-duty.changed.md
@@ -0,0 +1 @@
+Keep the 5p fuel duty cut to 1 July 2027, as announced at Budget 2026. On that date petrol and diesel return to 57.95p uprated by 2026 RPI growth, then rise by RPI each 1 April from 2028; LPG and natural gas return to their full rates.
diff --git a/docs/engineering/excise-duties.md b/docs/engineering/excise-duties.md
@@ -18,11 +18,11 @@ parameter history starts on 1 August 2023; the preceding alcohol regime and a
 complete 2023/24 calculation are outside this implementation. Tobacco rates
 start on 22 November 2023. The new alcohol, tobacco and car formulas return their
 default zero before 2024; that is an unmodelled period, not a statutory exemption.
-Gas duty covers 2022/23 onwards and includes the 1 January 2027 and 1 March 2027
-increases. SI 2026/555 removed the September 2026 step announced at Budget 2025
-and moved the December 2026 step to 1 January 2027. Rates after the last dated
-entry stay constant; the gas parameters do not forecast future inflation
-increases.
+Gas duty covers 2022/23 onwards. SI 2026/555 removed the September 2026 step
+announced at Budget 2025 and moved the December 2026 step to 1 January 2027.
+Budget 2026 then kept the proportionate cut to 1 July 2027, when the gas rates
+return to their full levels. Rates after the last dated entry stay constant;
+the gas parameters do not forecast future inflation increases.
 
 For alcohol and tobacco, a model year such as `2026` represents 6 April 2026 to
 5 April 2027. Quantities and cigarette retail prices are constant across that
@@ -154,32 +154,36 @@ matching the legislation. No universal litre-to-kilogram density is assumed.
 The existing `fuel_duty` output includes these charges. Rural fuel duty relief
 continues to apply only to petrol and diesel.
 
-From 1 March 2027 onwards, the gas parameters hold LPG at £0.3161/kg and natural
-gas at £0.2470/kg. This implementation stops at the last numerical rates in the
-HMRC 2026-to-2027 schedule and does not extrapolate gas rates using an inflation
-forecast. This is a modelling limitation: HMRC states that RPI uprating resumes
-from 2027/28. The petrol and diesel rate includes forecast RPI uprating each
-1 April from 2027, so its rates rise while the gas rates stay flat. Later-year gas duty is therefore lower than it would be
-under the same uprating assumption. Analyses beyond March 2027 that require
-consistent fuel-duty forecasts must supply an uprated gas-rate path explicitly.
+From 1 July 2027 onwards, the gas parameters hold LPG at £0.3161/kg and natural
+gas at £0.2470/kg, the full rates before the 2022 cut. This implementation does
+not extrapolate gas rates using an inflation forecast. This is a modelling
+limitation: Budget 2026's costing says fuel duty rates are uprated by RPI from
+1 July 2027. The petrol and diesel rate includes that forecast uprating, so its
+rates rise while the gas rates stay flat. Later-year gas duty is therefore lower
+than it would be under the same uprating assumption. Analyses beyond June 2027
+that require consistent fuel-duty forecasts must supply an uprated gas-rate path
+explicitly.
 
 Sources: [HMRC fuel duty rates 2026 to 2027](https://www.gov.uk/government/publications/fuel-duty-rates-for-2026-to-2027/fuel-duty-rates-2026-to-2027)
 (RPI uprating from 2027/28),
 [HMRC amended fuel duty rates 2026 to 2027](https://www.gov.uk/government/publications/amended-fuel-duty-rates-for-2026-to-2027/amended-fuel-duty-rates-2026-to-2027)
-and [SI 2026/164 as amended by SI 2026/555](https://www.legislation.gov.uk/uksi/2026/164).
+[SI 2026/164 as amended by SI 2026/555](https://www.legislation.gov.uk/uksi/2026/164)
+and [Budget 2026 policy costings, page 13](https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=13).
 
 ## Petrol and diesel rate
 
 The main rate on unleaded petrol and diesel is keyed to each statutory change:
-52.95p a litre from 23 March 2022, continued by annual orders to 31 December 2026;
-55.95p from 1 January 2027 (SI 2026/164 as amended by SI 2026/555); and the Hydrocarbon Oil
-Duties Act 1979 rate of 57.95p from 1 March 2027. Budget 2025 states that rates
-will be uprated by RPI from April 2027, and HM Treasury's Budget 2025 costing
-dates this from 1 April 2027. That uprating is policy, not law: HMRC's amended
-note of 22 May 2026 says final rates will be confirmed at Budget 2026. No
-official source names the RPI measure. The model applies the previous calendar
-year's RPI growth from the OBR forecast in
-`gov.economic_assumptions.yoy_growth.obr.rpi` on each 1 April, rounded to the
+52.95p a litre from 23 March 2022, continued by annual orders to 31 December 2026
+(SI 2026/164 as amended by SI 2026/555). Those orders then stepped to 55.95p on
+1 January 2027 and to the Hydrocarbon Oil Duties Act 1979 rate of 57.95p on
+1 March 2027. Budget 2026 (paragraph 6.211) cancelled both steps and kept the
+cut to 1 July 2027. Its costing (page 13) says: "On 1 July 2027, fuel duty rates
+will increase by 5ppl and will be uprated in line with the Retail Prices Index
+(RPI). From 1 April 2028, fuel duty rates will be uprated annually in line with
+RPI." That is policy, not law. No official source names the RPI measure. The
+model takes the 57.95p pre-cut rate and applies 2026 RPI growth on 1 July 2027,
+then the previous calendar year's RPI growth on each 1 April from 2028, from the
+OBR forecast in `gov.economic_assumptions.yoy_growth.obr.rpi`, rounded to the
 nearest hundredth of a penny. The steps to 1 April 2031 are written out by
 `calculate_fuel_duty_rates.py`, and a test fails when they fall out of date
 with the RPI forecast. Later steps come from the parameter's uprating metadata.

diff --git a/policyengine_uk/parameters/gov/hmrc/fuel_duty/calculate_fuel_duty_rates.py b/policyengine_uk/parameters/gov/hmrc/fuel_duty/calculate_fuel_duty_rates.py
@@ -1,11 +1,14 @@
 """
 Generates the forecast RPI uprating steps in petrol_and_diesel.yaml.
 
-The statutory schedule ends with the Hydrocarbon Oil Duties Act 1979 rate of
-57.95p from 1 March 2027. Budget 2025 states that rates will then be uprated
-by RPI from April 2027. This script applies each previous calendar year's RPI
-growth from economic_assumptions/yoy_growth.yaml on 1 April (the date in HM
-Treasury's Budget 2025 costing), rounding to the nearest hundredth of a penny, and writes the results between the BEGIN and END
+Budget 2026 keeps the 5p cut to 1 July 2027. Its policy costing (page 13)
+says that "On 1 July 2027, fuel duty rates will increase by 5ppl and will be
+uprated in line with the Retail Prices Index (RPI). From 1 April 2028, fuel
+duty rates will be uprated annually in line with RPI." This script takes the
+57.95p pre-cut rate (Finance Act 2011 s. 19), applies 2026 RPI growth on
+1 July 2027, then each previous calendar year's RPI growth on 1 April from
+2028, using economic_assumptions/yoy_growth.yaml. It rounds to the nearest
+hundredth of a penny and writes the results between the BEGIN and END
 markers in petrol_and_diesel.yaml. Run it with --update whenever the RPI
 forecast changes; test_fuel_duty_schedule.py fails until you do.
 
@@ -24,15 +27,19 @@
 PARAMETER_FILE = FUEL_DUTY_DIR / "petrol_and_diesel.yaml"
 YOY_GROWTH_FILE = FUEL_DUTY_DIR.parents[1] / "economic_assumptions" / "yoy_growth.yaml"
 
-# The last statutory rate, and the first and last 1 April steps written out.
-# Later steps come from the parameter's uprating metadata.
-STATUTORY_DATE = "2027-03-01"
-FIRST_UPRATING_YEAR = 2027
+# The pre-cut rate the first step uprates, the date the cut ends, and the
+# first and last 1 April steps written out. Later steps come from the
+# parameter's uprating metadata.
+BASE_DATE = "2011-03-23"
+CUT_END_DATE = "2027-07-01"
+FIRST_APRIL_YEAR = 2028
 LAST_UPRATING_YEAR = 2031
 
 BEGIN = "  # BEGIN RPI forecast generated by calculate_fuel_duty_rates.py\n"
 END = "  # END RPI forecast generated by calculate_fuel_duty_rates.py\n"
 PENNY_HUNDREDTH = Decimal("0.0001")
+BUDGET_2026 = "https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=138"
+COSTING_2026 = "https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=13"
 
 
 def rpi_series() -> dict:
@@ -46,24 +53,28 @@ def rpi_growth_by_year() -> dict:
     return {int(str(date)[:4]): Decimal(str(value)) for date, value in values.items()}
 
 
-def statutory_rate() -> Decimal:
+def base_rate() -> Decimal:
     with open(PARAMETER_FILE) as f:
         values = yaml.safe_load(f)["values"]
-    entry = {str(date): value for date, value in values.items()}[STATUTORY_DATE]
+    entry = {str(date): value for date, value in values.items()}[BASE_DATE]
     return Decimal(str(entry["value"] if isinstance(entry, dict) else entry))
 
 
 def forecast_steps() -> list:
-    """(date, rate, previous rate, RPI growth) for each forecast 1 April step."""
+    """(date, rate, previous rate, RPI growth) for each forecast step."""
     growth = rpi_growth_by_year()
-    rate = statutory_rate()
+    dates = [CUT_END_DATE] + [
+        f"{year}-04-01" for year in range(FIRST_APRIL_YEAR, LAST_UPRATING_YEAR + 1)
+    ]
+    rate = base_rate()
     steps = []
-    for year in range(FIRST_UPRATING_YEAR, LAST_UPRATING_YEAR + 1):
+    for date in dates:
+        year = int(date[:4])
         previous = rate
         rate = (previous * (1 + growth[year - 1])).quantize(
             PENNY_HUNDREDTH, rounding=ROUND_HALF_UP
         )
-        steps.append((f"{year}-04-01", rate, previous, growth[year - 1]))
+        steps.append((date, rate, previous, growth[year - 1]))
     return steps
 
 
@@ -79,10 +90,10 @@ def render(steps: list) -> str:
             f"      note: Forecast. {previous} uprated by {int(date[:4]) - 1} RPI "
             f"growth of {growth * 100:.1f}%.",
             "      reference:",
-            "        - title: Budget 2025 (fuel duty uprated by RPI from April 2027)",
-            "          href: https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html",
-            "        - title: HM Treasury, Budget 2025 policy costings, page 14 (from 1 April 2027)",
-            "          href: https://assets.publishing.service.gov.uk/media/692872fd2a37784b16ecf676/Budget_2025-Policy_Costings.pdf#page=14",
+            "        - title: Budget 2026, paragraph 6.211 (5p cut ends and RPI uprating from 1 July 2027)",
+            f"          href: {BUDGET_2026}",
+            "        - title: HM Treasury, Budget 2026 policy costings, page 13 (RPI on 1 July 2027, then each 1 April from 2028)",
+            f"          href: {COSTING_2026}",
             f"        - title: {forecast['title']} (RPI forecast)",
             f"          href: {forecast['href']}",
         ]
@@ -106,7 +117,7 @@ def main():
     )
     args = parser.parse_args()
     steps = forecast_steps()
-    print(f"{STATUTORY_DATE}: {statutory_rate()} (statutory)")
+    print(f"{BASE_DATE}: {base_rate()} (pre-cut rate)")
     for date, rate, previous, growth in steps:
         print(f"{date}: {rate} ({previous} x (1 + {growth}))")
     if args.update:

diff --git a/policyengine_uk/parameters/gov/hmrc/fuel_duty/lpg.yaml b/policyengine_uk/parameters/gov/hmrc/fuel_duty/lpg.yaml
@@ -2,17 +2,18 @@ description: The UK levies road fuel duty on LPG at this rate per kilogram.
 values:
   '2021-01-01': 0.3161
   '2022-03-23': 0.2888
-  '2027-01-01': 0.3052
-  '2027-03-01': 0.3161
+  '2027-07-01': 0.3161
 metadata:
   unit: currency-GBP
   period: year
   label: fuel duty rate on LPG per kilogram
   reference:
   - title: Hydrocarbon Oil Duties Act 1979, section 8
     href: https://www.legislation.gov.uk/ukpga/1979/5/section/8
-  - title: SI 2026/164, article 8, as amended by SI 2026/555 (1 January to 28 February 2027)
+  - title: SI 2026/164, as amended by SI 2026/555 (cut continued to 31 December 2026)
     href: https://www.legislation.gov.uk/uksi/2026/164
+  - title: Budget 2026, paragraph 6.211, and policy costings page 13 (proportionate cut to other fuels to 1 July 2027; not yet law)
+    href: https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=13
   - title: HMRC, Amended Fuel Duty rates 2026 to 2027 (22 May 2026)
     href: https://www.gov.uk/government/publications/amended-fuel-duty-rates-for-2026-to-2027/amended-fuel-duty-rates-2026-to-2027
   fiscal_year_blend: true
diff --git a/policyengine_uk/parameters/gov/hmrc/fuel_duty/natural_gas.yaml b/policyengine_uk/parameters/gov/hmrc/fuel_duty/natural_gas.yaml
@@ -2,17 +2,18 @@ description: The UK levies road fuel duty on natural gas at this rate per kilogr
 values:
   '2021-01-01': 0.247
   '2022-03-23': 0.2257
-  '2027-01-01': 0.2385
-  '2027-03-01': 0.247
+  '2027-07-01': 0.247
 metadata:
   unit: currency-GBP
   period: year
   label: fuel duty rate on natural gas per kilogram
   reference:
   - title: Hydrocarbon Oil Duties Act 1979, section 8
     href: https://www.legislation.gov.uk/ukpga/1979/5/section/8
-  - title: SI 2026/164, article 8, as amended by SI 2026/555 (1 January to 28 February 2027)
+  - title: SI 2026/164, as amended by SI 2026/555 (cut continued to 31 December 2026)
     href: https://www.legislation.gov.uk/uksi/2026/164
+  - title: Budget 2026, paragraph 6.211, and policy costings page 13 (proportionate cut to other fuels to 1 July 2027; not yet law)
+    href: https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=13
   - title: HMRC, Amended Fuel Duty rates 2026 to 2027 (22 May 2026)
     href: https://www.gov.uk/government/publications/amended-fuel-duty-rates-for-2026-to-2027/amended-fuel-duty-rates-2026-to-2027
   fiscal_year_blend: true
Original file line number	Diff line number	Diff line change
		@@ -0,0 +1 @@
		Keep the 5p fuel duty cut to 1 July 2027, as announced at Budget 2026. On that date petrol and diesel return to 57.95p uprated by 2026 RPI growth, then rise by RPI each 1 April from 2028; LPG and natural gas return to their full rates.