By IanIn his first budget as Chancellor, John Healey has announced plans to remove the 4% import tariff on kerosene as part of a wider range of measures aimed at easing household and business costs.
It's a welcome prospect for the 1.5 million households that rely on heating oil, as well as farms, businesses and other organisations.
What does this actually mean for consumers? Let’s look into what’s been announced and how it might work in the market.
Most kerosene imports are already tariff exempt
The UK has a standard import tariff of 4% on kerosene used for heating. However qualifying imports - that’s imports from countries covered by preferential trade agreements with the UK - are already exempt. So no duty is due.
So, how much of the heating oil we use is exempt? Research published by the UK Trade Policy Observatory at the University of Sussex found that 83% of the import value of kerosene products covered in its analysis already used preferential tariffs.
That leaves 17% of the import value examined which did not use preferential tariffs, although not all of it necessarily paid the full 4% duty. The research covers specific kerosene product categories, rather than all heating oil imported into the UK.
These figures refer to specific commodity categories and import values, rather than all heating oil sold in the UK. Nevertheless, they suggest that the financial benefit may be considerably smaller than the 4% headline figure implies.
Could removing tariffs improve supply?
Fuel markets have been constrained by supply issues due to various conflicts and international tensions.
Removing tariffs could open up, or at least make more competitive, wider supply options for the UK market. This wouldn't necessarily translate into an immediate reduction in retail prices, but greater sourcing flexibility could improve supply resilience and increase competitive pressure in the wholesale market.
There are some big producers who fit into this category, including the United States, Saudi Arabia and the UAE.
Independent distributor Rye Oil has suggested that improved supply security could be a more significant benefit than any immediate reduction in retail prices.
What could the tariff removal save per litre?
The tariff is calculated on the value of imported kerosene, there are several steps and associated costs before it reaches your tank.
Let’s dig into some numbers.
If kerosene enters the UK with an illustrative value of 60p per litre, the 4% tariff amounts to 2.4ppl.
For our example, let's assume 17% of imported heating kerosene pays the full tariff, with the remaining 83% entering duty free.
Spread across all imported kerosene the average saving would be:
2.4p x 17% = 0.408p per litre.
For a 1,000 litre delivery that’s equivalent to £4.08 before accounting for all of the costs and margins associated with its storage, processing and delivery.
Explore the potential savings
- 4% of 60p is 2.4p on each litre that pays the tariff.
- With 17% of imports paying it, the average across imported fuel is 0.408p per litre.
- With imports supplying 50% of UK heating kerosene, the average across all supply is 0.204p per litre.
- With 100% passed on, customers could save 0.204p per litre.
- On 1,000 litres that is £2.04.
These are hypothetical savings, not a forecast of retail prices. The £4.08 example above is the average across imported fuel only. The calculator also allows for the share of UK heating kerosene that comes from imports, which is why its default result is lower.
What have heating oil prices been doing over the past month
To put those potential savings into perspective, we examined movements in the GB PriceTank Benchmark for kerosene over the 30 days to 27th October.
| Date | Benchmark |
|---|---|
| 27 September 2026 | 111.89p per litre |
| 27 October 2026 | 114.15p per litre |
| Change | +2.26p (+2.0%) |
The PriceTank Benchmark rose from 111.89p to 114.15p per litre, an increase of 2.26p or 2%. Our illustrative tariff saving of 0.408p per litre is small compared with the 2.26p increase recorded over the month, demonstrating how difficult it may be to distinguish any eventual saving from normal market movements.
In Summary
Will there be savings, yes. Will they noticeably reduce the price you pay for heating oil? Unlikely.
In fairness, the government have pitched this as part of a package of small acts to relieve pressure. The reduction in tariffs will have an effect, albeit a minor one.
But there's a wider benefit worth considering. Removing the tariff could make alternative international suppliers more competitive, giving the UK greater flexibility in sourcing kerosene. The immediate impact on prices may be limited, but the benefits to competition and security of supply could prove more significant.
About our calculations
The tariff model uses an illustrative import value of 60p per litre, a 4% duty and a hypothetical 17% share of imported fuel subject to that duty. The calculator allows readers to change these assumptions.
The 17% is not a verified market-wide tariff exposure figure. It is informed by the UK Trade Policy Observatory's analysis of particular kerosene import categories.
PriceTank's Great Britain price movements use the PTB-1.0 closing benchmark for 27 September to 27 October 2026. The number of contributing sources fell from seven to six on 26 October, which may affect comparability.
All figures are indicative of market conditions and do not guarantee prices or future savings.
Sources
- HM Treasury: Everyday fixes to make life easier for millions of Britons (26 October 2026)
- HM Treasury: Budget 2026 tax related documents
- Department for Business and Trade: Call for input on cost of living tariff suspensions
- UK Trade Policy Observatory: Cheaper at the border, will it reach your basket? (July 2026)
- Rye Oil: Heating oil 4% import duty drop (27 October 2026)