Tax on Pleasure Craft Fuel to Increase

There's bad news for pleasure boaters in the UK aspolicy had been fixed but that HMRC would be
the Government makes known its verdict on Redworking closely with the RYA, the BMF and other
Diesel's future.stakeholders to develop the detail of the declaration
But first...process and apportionment of fuel for domestic use.
What is Red Diesel?Following that consultation process, HMRC will produce
Up until now, UK leisure boaters have been able to fuelcomprehensive guidance.
their boats with red diesel which is subject to lower'Our main concerns were availability and safety,' said
VAT. Coloured with red dye to distinguish it from theNeil Northmore, the RYA's government affairs adviser.
more expensive variety, red diesel is typically available'We were aware that there was a danger that some
for around 40p per litre, less than half the nationalretailers in more remote areas would simply not bother
average for diesel on the forecourt.selling to pleasure boats on the premise that it would
The issue.be more trouble than it was worth to distinguish
In recent years, permission to use red diesel becamebetween private and commercial craft, and then
subject not only to national approval, but also the EU's.process the paperwork.'
The reason is down to EU policies that bring into lineIncrease in duty.
taxes on fuels and energy, and the fact that consentHoward Pridding, executive director of the BMF said:
to use red diesel depends on exemption (derogation)'We are pleased with how HMRC has managed the
from these EU rules.consultation process and the position that they have
The Royal Yachting Association (RYA) fought tofinally adopted. When buying fuel, people will be
extend the derogation that allowed UK leisure boatersrequired to sign a declaration that states whether their
to use lower duty red diesel. In October 2006, theboat is for private or commercial use.'
British Government decided to support the case.It will then be up to HMRC whether they wish to
However, EU officials failed to accept theinvestigate whether the purchase was correct or not,
government's arguments and have decided that thehe explained.
derogation should end with effect from the end ofThe Future of Red Diesel.
December 2006. There is now a grace period in forceOn 28 February 2008, HM Revenue & Customs
for the phasing out of red diesel in the UK. In pleasurerevealed that from 1 November this year, boaters will
craft, red diesel will remain usable legally untilbe paying a duty rate of 56.94 pence per litre, instead
November 2008.of the current rate of 9.69 pence per litre.
Honesty is the best policy.Boaters will be forced to keep records of all diesel
Her Majesty's Revenue and Customs (HMRC) haspurchases, as it will become a criminal offence to have
decided that pleasure craft users can carry on usingdiesel on board for propulsion that you cannot prove
red diesel as long as they make a declaration to thewas bought at the higher rate of diesel.
supplier and pay the full rate of tax for heavy oil.Diesel bought for use as heating fuel will still be
It will then be the responsibility of the Registered Dealeravailable at a rebated rate. So to add further
in Controlled Oils (RDCO) to declare the duty collectedcomplication, there will be a system in place where you
to HMRC. What makes the situation less clear is thatcan declare that a proportion of the diesel you are
fuel which is intended for domestic use (not fortaking on is for 'domestic purposes'!
boating) will still be available at the lower tax rate.Only time will tell how this news will hit the market, but
'Availability and Safety'.it's not hard to imagine it having some impact.
The HMRC's Dave Fitzgerald confirmed the core