The average price of unleaded in the UK has hit a near record high, leading to calls for a VAT cut.

The cost of a litre of unleaded now stands at 140.22p – only 2p off the record high seen in April 2012

The cost of a litre of unleaded now stands at 140.22p – the highest level since September 2012 and only 2p off the record high seen in April of the same year, RAC Fuel Watch data shows.

Prices have now gone up by nearly 26p a litre in just 12 months, a jump of 22% from 114.50p a year ago.

While a major factor has been the rising cost of a barrel of oil, which has doubled from $41 to $83, drivers are also charged nearly 58p in fuel duty on every litre. And, on top of the delivery cost and the retailer’s margin, VAT is also charged, which currently accounts for 23p a litre – up by 4p a litre in just a year.

September’s switch E10 petrol – which increased the biofuel content of petrol from 5% to up to 10% – has also contributed slightly to the price rise by adding around a penny a litre to the cost before VAT is applied.

Calling on the Government to take action and do whatever it can to help ease the burden on drivers, the RAC has said a VAT cut might be the most effective route.

Fuel spokesman Simon Williams said: “It might be most effective for the Government to consider temporarily cutting the level of VAT on motor fuel to help hard-pressed drivers. While there have been calls for fuel duty to be cut in the past, there is a real risk that any such cut could be swallowed up by retailers rather than benefiting drivers. As VAT is charged on the final cost at the pumps, drivers would see the benefit immediately.”

He added: “Our data shows we haven’t seen the petrol price at this sort of level since September 2012, and we’re now worryingly close to the all-time average UK price high of 142.48p that was hit in the same year. At a time when households and businesses are facing spiralling prices in other areas this is a huge concern.

“With just two weeks to go until COP26, the uncomfortable truth for the Government is that petrol prices are now reaching unprecedented levels and, along with rising domestic energy prices, will be putting a huge financial strain on households that depend on their vehicles and, in turn, the economy.”