Reeves and Starmer Government to make £20m a day in tax from Iran war chaos

The Chancellor can expect a multibillion-pound windfall in tax as the war drives up energy prices at petrol pumps

War in the Middle East is set to bring in £20m-a-day extra in energy taxes for Rachel Reeves. The Chancellor can expect a multibillion-pound windfall in tax as the war drives up energy prices at petrol pumps.

The additional revenue includes billions of pounds levied from North Sea oil and gas profits, power generators and VAT on petrol sales.

Now the Government is being urged by lobbying groups to use the cash to shield households and drivers from the spiralling cost of energy as war rages on between Donald Trump and the Iranians.

FairFuel UK founder Howard Cox called on ministers to cut fuel duty as the price of petrol is at a 28-month high and diesel hits a record £2 a litre.

Household energy bills could also increase by £288 a year in July, according to latest forecasts from analysts Cornwall Insight.

But Government sources warned any extra monies from an energy tax windfall will be swallowed up by the increased cost of borrowing since the start of the war.

PM Sir Keir Starmer chaired a meeting of the Cobra crisis committee yesterday (Tues) to consider the impact on households and the wider economy from soaring energy costs.

Ms Reeves has already indicated that targeted help for poorer households could be available if bills continue to rise.

Energy consumers minister Martin McCluskey said: "Tackling the affordability crisis is our number one priority.

"I know many families will be thinking about how events in the Middle East might impact the cost of living at home.

"We will continue to fight people's corner through this crisis."

The increased windfall tax take was based on analysis of Office for Budget Responsibility figures from 2025 by Chris Wheaton, of financial services firm Stifel.

A Treasury statement said: "We understand people are worried about how global conflicts could affect the cost of living.

"It's still too early to know the full impact of this crisis.

"But as the chancellor said, she will take the necessary decisions to support families and protect public finances."