Hrmc.co.uk

UK Red Diesel - the levying of 1st November 2008

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

How does it work?

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

HMRC said: "It is for the buyer 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 use the most popular and is therefore likely that many users to declare such an apportionment. "

Example: 100 liters of marine fuel purchased by owners of pleasure boats.

• 40 liters subject to current rate of duty - 9.69 pence per liter (PPL) at the 5% VAT
• 60 liters subject to full rate - 50.35ppl to 17.5% VAT
• The combined effect could increase the cost of fuel from 70p a liter to about 1.27 pounds for propulsion

Registered Dealers in Controlled Oils (RCDO) will report to HMRC for any additional duty they receive from recreational boaters. RCDOs already a general duty of care to ensure that they are regulated oil supply for legitimate uses.

The owners of houseboats

Owners of houseboats whose principal residence is their boat and keep certain records, such as a driver of Peniche, Residential Mooring Licence, Bill Council Tax in respect of the mooring or other peripheral documentation, invoices or bills which provides proof of permanent residence, they may purchase all their fuel at a rate recovery

Impact on industry

Availability and supply facilities remain unchanged at present. The increase in fuel costs over the last year is likely to hit parts of boating. However, from 1 November with resourceful boat owners adapting to new marine fuel human rights legislation and perhaps using their boats a little less than the current average of 50hrs per year, in a context of recession possible, it will be difficult to measure only the effect of this change in legislation will have on the UK boating industry.