Where do we go from here?

The Commission announces the end of red diesel for pleasure boats - but where do we go from here?

On Thursday a Communication from the European Commission revealed that they have rejected the UK’s arguments for an extension to the red diesel derogation. You can read the Communication here

This means that pleasure boaters will no longer be able to use the low-tax fuel. But it also raises numerous questions.

The first question is how the Government will react. The Commission only specifies a minimum rate of tax, which is considerably lower than the rate charged on petrol and diesel in the UK.

We will be arguing very strongly that marine users should be paying the European minimum (around 20p per litre) rather than the current roadside diesel duty, which is 48.35p per litre. Currenly red diesel is taxed at 7.69p per litre.

What we don’t know is when the new tax rate will come into effect. Banning motorboaters from using red diesel will require a change to our legislation, which obviously takes time. It is thought that we could not implement a change before March or April at the earliest.

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Finally, the Communication from the Commission mentions that “the applicant Member States may adopt measures aimed at alleviating or mitigating problems of transition to the regime of standard taxation”. Exactly what this means is unclear, but we are talking to the Treasury to learn more.