Full tax payable on diesel for pleasure cruising as of 1 November 2008

UK boat owners are facing a final season of low-cost red diesel as the Government announces its intention to enforce the full rate of duty for heavy oil. Unless duty is reduced in the upcoming budget, waterside diesel could rise to around £1.20 per litre as of 1 November 2008, making it more expensive than any road fuels.

According to the RYA: ‘The only real remaining issue is how the impact of increased diesel prices will affect the marine leisure industry and participation.’

Executive Director of the British Marine Federation, Howard Pridding, said:
‘While no-one is going to pretend that the duty increase on red diesel is a good thing, we are pleased with how HMRC has managed the consultation process and the position that they have finally adopted.’

Read the nine-page HMRC document in full here

The following quotes are from the document (linked above) titled: Impact Assessment of the implementation of the Energy Products Directive (EPD) on private pleasure boats published by HM Revenue and Customs following their consultations held 1 August -31 October 2007.

‘Private pleasure vessels will continue to use marked fuel (red diesel) but at the rate for heavy oil, repaying the rebated duty via the fuel suppliers (RDCOs) who will declare this to HMRC. The rebated rate of duty is currently 9.69 ppl; the full rate is currently 56.94 ppl.

‘An allowance for domestic use (heating) will be permitted.’

‘RDCOs who supply fuel to private pleasure craft will be required to identify such sales, charge the higher rate of duty at the point of sale and pay this to HMRC when they submit their return.’

‘In order for suppliers to satisfy HMRC that the correct rate has been charged they will need to keep records of their individual retail sales.’

‘The loss of the derogation will increase the price of fuel for private pleasure boat use, which in turn could lead to a reduction in the number of suppliers.’

‘The loss of the derogation increases the price of fuel for private pleasure boat propulsion which, other things equal, will reduce the amount of fuel used for this purpose. This has a direct carbon and environmental benefit.’

Estimated size of fuel business: ‘750,000 private pleasure boating transactions a year’

‘HMRC estimates that the revenue gain from the expiry of the boat derogation will be £10 to £15 million a year. Taken in the context of total hydrocarbon oils duty revenues of £25 billion a year, the private pleasure boat sector will account for a fraction of one per cent of total revenues.’