HM Revenue & Customs published the outcome of their consultation into the use of red diesel on the 9th July, which confirms the announcement made in the Chancellor’s Spring Budget.
We wrote to HM Treasury earlier in the year, welcoming Government’s aim to reduce carbon emissions. However, we also highlighted our concerns that removing all access to red diesel could negatively impact on the environment and the economy in the shorter term. We will continue to raise these issues as part of a new consultation that has now been launched by HM Treasury.
Private pleasure craft users are currently entitled to use red diesel for both propulsion and non-propulsion use, but they have to pay white diesel rates for the fuel used for propulsion. The government says it will continue to work with craft users and fuel suppliers to understand how and when they will implement the changes, once they enter into force.
Private pleasure craft owners will remain entitled to use red diesel for non-propulsion uses, if they have a separate tank. This would be for things like heating, lighting and for powering appliances via a battery charged using red diesel. For owners with only one fuel tank on board, the Treasury consultation includes a proposal for a new relief scheme. This would allow approved fuel suppliers to deduct the duty difference on the proportion of white diesel intended for non-propulsion use from the sale price. This would then be passed on to the private pleasure craft user at point of sale and the fuel suppliers would reclaim this deducted duty from HMRC. The consultation is calling for views on whether a split of 60% for propulsion and 40% for non-propulsion use reflects most crafts’ typical fuel use.
HM Treasury and HMRC are continuing to liaise with IWA and other waterway organisations. We will be submitting a response to the HMT consultation which closes on 1st October.
Useful Government website links
- HMRC consultation
- HM Treasury’s consultation into Reforms to the tax treatment of red diesel and other rebated fuels