The Government is planning legislation to prohibit the use of red diesel for propulsion in “private pleasure boats” (in the Government’s eyes this seems to include boats used as homes), following the 2018 judgement by the European Court of Justice (CJEU) regarding red diesel in private pleasure boats. This is part of a wider phasing out of red diesel for many uses, to meet environmental obligations. The Government plans to implement the changes from April 2022, though this may be phased in later for private boats. The current consultation follows a 2019 HMRC consultation on implementing the CJEU judgement on red diesel in private boats.
The deadline is 1st October 2020. The consultation and the response form are online here https://www.gov.uk/government/consultations/consultation-on-reforms-to-the-tax-treatment-of-red-diesel-and-other-rebated-fuels
The Government is proposing the following:
- People whose main or only home is their boat will continue to be entitled to use red diesel, but only if they have a home mooring, including those boats where all uses are fuelled from the same tank, provided they fulfil certain requirements that are yet to be decided.
- Liveaboard boaters without a home mooring will continue to be able to use red diesel for domestic heat and power, but only if they have two fuel tanks. Otherwise they will have to use white diesel for all purposes, but will get a rebate on the diesel they use for domestic heat and power.
- The Government is considering either a blanket 60/40 split or self-declaration to determine the rebate on white diesel used for domestic heat and power.
- Boaters already pay the white diesel rate of duty on the red diesel they use for propulsion, by self-declaring the percentage to the supplier or sometime by the supplier unilaterally imposing a 60/40 split; this has been the case since 2008.
- There will be penalties for anyone found to have bought and used red diesel for propulsion after a cut-off date, this is your chance to put your views on the impact of any penalties. We suggest that you keep all your diesel receipts after any change is implemented and to record your engine hours in case you need to defend yourself against any unjust accusations of having red diesel in your tank after any changes are implemented.
- The Government does not propose to require boaters to flush out their tanks to remove traces of red diesel.
- The consultation seeks people’s views on whether removing the entitlement to use red diesel will create perverse environmental outcomes.
- The consultation invites people’s views on the impact of the change to them personally and/or to their business.
You can send responses by 1st October 2020 to ETTAnswers@hmtreasury.gov.uk, or by completing the submission form here:
Or you can post responses to:
Red Diesel Consultation
Energy and Transport Tax team
1 Horse Guards Road