Chancellor John Healey extended fuel duty relief in Budget 2026, prompting a welcome from logistics groups but calls for further support with operating costs and investment.
Delivering the statement on 28 October, Healey retained the 5p-per-litre cut until 30 June 2027 and deferred inflation uprating, saying the extension would run “through the winter and spring to July, supporting households, hauliers and farmers”.
Ben Fletcher, chief executive of Logistics UK, said: “The government’s decision to retain the 5p per litre cut in fuel duty is a wise decision which will help keep trade moving, support growth across the economy and avoid adding further inflationary pressures.”
However, the relief remains temporary. Petrol and diesel duty is scheduled to rise from 52.95p to 60.59p per litre on 1 July 2027, when the 5p cut ends and inflation uprating takes effect. That would add £7,640 in duty, before VAT, to every 100,000 litres purchased after the increase.
Richard Smith, managing director of the Road Haulage Association, thus called for a 15p-per-litre rebate for essential users, arguing that transport businesses still faced severe cashflow pressures.
Warehouse and workforce costs
The relief on fuel came alongside higher business-rates multipliers for larger properties. Warehouses remained largely outside the new high-street relief, while England’s multiplier for properties with rateable values of at least £500,000 will rise from 50.8p to 52.5p from April 2027.
The government also extended the 1p Transitional Relief Supplement, a surcharge on some business rates bills, for two further years from April 2027. It applies to properties whose bill increases fall below the relevant relief caps.
John Scully, director of Sixteen Real Estate, welcomed the targeted retail, hospitality and leisure support but said industrial occupiers’ costs had been overlooked. He said: “You cannot protect the shopfront while ignoring the warehouses behind it.”
Employers will also face a higher wage floor: the National Living Wage will rise by 3.9% to £13.21 an hour from 1 April 2027.
Alongside that increase, the Budget confirmed support for recruitment through plans to expand apprenticeship brokerage from seven to 14 mayoral areas in England, connecting 16- to 24-year-olds with vacancies and helping employers create opportunities.
Tom Ashley, chief executive of International Logistics Group and Global Freight Solutions, welcomed the support for apprentices. He said: “You don’t need a degree to build a successful career in logistics. It is a sector where warehouse to boardroom is a reality not a slogan.”
Imports and packaging
For food importers, relief will come through tariff suspensions on 101 agri-food products, including baked beans and chocolate, from 26 November 2026 until 31 December 2028. VAT and trade remedy duties are unaffected.
Packaging requirements will change on a longer timetable. Mechanically recycled content used to claim Plastic Packaging Tax exemption will require certification from 1 April 2030, changing the evidence businesses need from their suppliers.
Earlier changes arrive in April 2027: previously announced rules will require certified mass-balance accounting for chemically recycled content, while pre-consumer waste will stop counting towards the tax’s recycled-content threshold.
Invoicing and online fulfilment
The paperwork accompanying transactions is also changing. The Budget set out the roadmap for mandatory VAT e-invoicing from 1 April 2029, originally announced in 2025. This means structured data exchanged between financial systems; emailing a PDF alone will not meet the requirement.
Technical requirements are due between October 2027 and April 2028. A separate consultation on sharing invoice data with HMRC did not introduce an additional reporting requirement.
Online sellers face an earlier change. From October 2027, marketplaces will become responsible for VAT on qualifying UK sellers’ goods located in the UK. This covers VAT-registered sellers and unregistered sellers exceeding £90,000 annually on an individual platform. Business-to-business, personal and second-hand goods sales are excluded; existing registration obligations remain unchanged.
In its Budget response, Post Office highlighted plans to expand parcel services. Chief executive Neil Brocklehurst said it was upgrading 600 branches and aimed to roll out up to 1,000 new multi-carrier self-service drop boxes by the financial year’s end.
Investment and energy costs
Businesses planning equipment purchases will see changes to the timing of tax relief. The main-rate first-year allowance will rise from 40% to 50% for qualifying expenditure on new, unused plant and machinery from 1 January 2027. The main writing-down allowance will fall from 14% to 12% from April 2027.
The higher initial allowance brings deductions forward, while the lower annual rate slows deductions on expenditure remaining in the main pool. These reduce taxable profits; existing full-expensing and Annual Investment Allowance routes remain available where eligible.
The British Industrial Competitiveness Scheme will offer eligible manufacturers in Great Britain electricity savings of up to 25% from April 2027. Standalone logistics operations will not qualify solely because they serve manufacturing supply chains.
For electric vehicles, the government committed £100m over two years from spring 2027 to reduce costs at local, lower-powered public chargers in Great Britain. This targets residential charging rather than depot installations. Separate plans to prioritise strategic electricity connections do not automatically cover warehouses or depots.
Gareth Anderson, head of business management at Allica Bank, welcomed the fuel duty extension but called for longer-term support. He said: “Established logistics firms keep supply chains moving but need manageable costs and access to finance to invest.”
IntraLogisteX – the UK’s largest annual warehousing and materials handling exhibition – takes place on 17-18 March 2027 at the NEC Birmingham. For exhibitor information and sponsorship opportunities, visit the official event website at www.intralogistex.co.uk
