Keith McGregor

UK Red Diesel – Duty Collection from 1st November 2008

HRMC clarified the way in which additional fuel duty is to be collected from the 1st November 2008, at the Southampton Boat Show. It will affect private pleasure craft owners when purchasing red diesel for propulsion and to a lesser extent when purchasing red diesel for heating.

Private pleasure craft owners will be able to continue to use marine red diesel for propulsion use, but at a modified duty rate. They will have to declare the percentage of fuel to be used for propulsion and domestic use respectively at time of purchase.

HMRC say “It is for the purchaser to declare the percentage of fuel used for propulsion.  However, analysis by both the industry and HMRC suggests that a split of 60% for propulsion and 40% for domestic use (heating, cooking etc) probably reflects most people’s use and it is therefore likely that many users will declare such an apportionment.”

Example: 100 litres of marine fuel purchased by a pleasure craft owner.

• 40 litres subject to the current rate of duty - 9.69 pence per litre (ppl) at 5% VAT
• 60 litres subject to full duty - 50.35ppl at 17.5% VAT
• The combined effect could well raise the cost of the fuel from 70p a litre to about £1.27 for propulsion

Registered Dealers in Controlled Oils (RCDO) will need to account to HMRC for any additional duty they receive from recreational boaters.  RCDOs already owe a general duty of care to ensure that they only make supplies of controlled oil for legitimate uses.

Residential boat owners whose primary residence is their boat and hold certain documentation, such as a Houseboat Licence, Residential Mooring Licence, Council Tax Bill in respect of the mooring, or other peripheral documentation, invoices or bills which provides proof of permanent residency, they may purchase all their fuel at the rebated rate

Availability and supply facilities remain unchanged at present. The increase in fuel costs over the last year will undoubtedly hit some areas of leisure boating. However from the 1st November with resourceful boat owners adapting to new marine fuel duty legislation and perhaps using their boats slightly less than the current average of 50hrs per year, against a backdrop of possible recession it will be difficult to measure alone the effect this change in legislation will have on the U.K. boating industry.

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