Wednesday, 26 April 2017

Red Diesel Conundrum

In the Spring Budget, the government announced that it would be issuing a call for evidence on the use of red diesel. This is so that the government understand how, where and why red diesel is used throughout the country. Red diesel (rebated diesel) sales account for about 14 percent of all forms of diesel sold. The vast majority of sales is commercial farming and forestry. However diesel sold for domestic and propulsion on boats is also significant.

There is a popular Brexit myth in boating circles that leaving the EU would mean the duty would automatically be removed and duty free red diesel would extend to propulsion once more. Governments are notorious for collecting tax and duty. Because diesel is now seen as a 'Dirty Fuel' and the need to improve 'clean alternatives' the government will be minded to increase duty to reduce use.

While the original sales of red diesel were duty free. Then as a result of changes at HMRC a derogation was granted for domestic use for heating. This brought about the ubiquitous 60/40 duty split. There is no call for keeping the 60/40 split and there is a good chance that HMRC will bring red and white under the same duty charge. Therefore the boaters as individuals and collectively as associations and trusts. Need to ensure some input into the collation of the evidence.

More information can be downloaded. Click Here

You can have your say by email:

You can also have your say by snail mail: Red Diesel, Energy and Transport Tax Team, Business and International Tax Group, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ

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