4 March 2021

Keeping the use of red diesel for both private and commercial boats is fantastic news for the inland waterways. IWA has lobbied government about this issue for many years and it will be very much welcomed by boat owners, freight operators, boatyards and waterway-based fuel suppliers.

This is a successful outcome of our campaigning for many years around the use of red diesel and taxation. The only disappointment is that the Chancellor has not so far recognised the significance of alternative fuels with any form of tax break. Hydrotreated Vegetable Oil (HVO) – identified by the IWA Sustainable Propulsion Group as a drop-in replacement for mineral diesel – is currently sold at around a £0.10 premium over its fossil fuel equivalent. At over 90% carbon neutral, its use can reposition inland boating close to the target carbon neutral goal.

The announcement in the Chancellor’s Budget of 3rd March coincided with the publication of the conclusion of last year’s Treasury consultation into the use of red diesel. It confirms that the current arrangement for private boat owners will continue. This means they can use red diesel and pay their fuel supplier the difference between the red diesel and white diesel rates on the proportion they intend to use for propulsion.

The document also confirms that all commercial boat operating industries will be able to continue to use red diesel. This is great news for inland waterways freight and getting more traffic off the roads.

The decision overturns the announcement from HMRC last July, which stated that privately owned pleasure craft would not be able to use red diesel from April 2022. Boat owners will welcome this change of plan, along with boatyards and boat-based fuel suppliers who would have had to invest in new equipment.

More details can be found in the government’s response document