Fuel duty on petrol and diesel will be cut by 5p per litre for the next year it was announced yesterday.

Starting from 6pm yesterday, the reduction will last until March 2023.

However, petrol prices have already increased by 18p per litre in a month.

Motorists have been hit by record pump prices and figures from Experian Catalist show the average cost of a litre of petrol at UK forecourts on Tuesday was 167.3p, while diesel was 179.7p.

So how will the cut in fuel duty help you?

What is fuel duty?

Fuel duty is levied at a rate of 57.95p per litre for petrol and diesel.

It has been frozen since March 2011.

VAT is added on top, at a rate of 20% of the combined product price and duty.

Oil prices surged immediately after Russia’s invasion of Ukraine due to supply fears, leading to a rise in wholesale costs.

Prices were already increasing as global economies recover from the coronavirus pandemic.

What impact will a 5p reduction have?

The RAC calculated this would reduce the cost of filling a typical 55-litre family petrol car by around £3.

RAC head of policy Nicholas Lyes said: "With petrol and diesel prices breaking records almost daily, and the cost to fill up a petrol car at over £92 and a diesel at nearly £100, we’re pleased to see the Chancellor has given drivers some much-needed relief at the pumps, but the reality is that a 5p cut in duty is something of a drop in the ocean. In reality, reducing it by 5p will only take prices back to where they were just over a week ago.

"With the cut taking effect at 6pm tonight drivers will only notice the difference at the pumps once retailers have bought new fuel in at the lower rate. There’s also a very real risk retailers could just absorb some or all of the duty cut themselves by not lowering their prices.

"If this proves to be the case it will be dire for drivers. It also wouldn’t be totally unexpected based on the biggest retailers not reducing their prices late last year when the oil price fell sharply."