Red diesel: 60/40 split confirmed

From 1 November, a 60/40 split for propulsion and 'domestic use' diesel will become standard at pump

Britain’s motorboaters got some good news this morning with the announcement that from 1 November a split of 60/40 for propulsion and ‘domestic use’ diesel will become the accepted standard at the pump.

Put simply, for every 100 litres purchased, 40 litres will be subject to the current rate of duty – 9.69 pence per litre (ppl) at 5% VAT – and 60 litres will be subject to full duty – 50.35ppl at 17.5% VAT.

This news comes after months of intense lobbying by the British Marine Federation (BMF) and RYA over an acceptable apportionment that satisfies all parties, including HM Revenue & Customs (HMRC) and fuel vendors.

The announcement was made at a briefing this morning at the PSP Southampton Boat Show, but MBM was given exclusive access to the briefing paper ahead of time. In it, the BMF says that HMRC agreed that a 60/40 split “probably reflects most people’s use and it is therefore likely that many users will declare such an apportionment”.

The wording may be vague, but the meaning is crystal clear – a declaration of 60/40 at the pump from 1 November will be the accepted, and HMRC-sanctioned standard.

Recommended videos for you

The boater will still be required to sign a declaration saying this percentage is accurate, however, but will not need to keep exhaustive records of his or her fuel use.

Residential boatowners will be able to declare that 0% of their fuel is for propulsion, but will need to provide evidence should HMRC wish to follow up on their declaration.

“HMRC has understood our arguments about the potential difficulties for fuel suppliers in calculating duty and VAT – in particular for the smaller operators – when faced with customers claiming different percentages of fuel used for propulsion,” the RYA and BMF said.

“HMRC also appreciates the concerns of users about the difficulty of calculating and apportioning their own intended usage accurately and their worries about unintentionally making an inaccurate declaration.”

Considering that before this announcement, it was looking likely that boaters would be required to keep an accurate log of their exact fuel usage, this result is the silver lining in the red diesel cloud. It not only means less administration for boater and vendor, but also gives a much needed shot in the arm for an industry suffering from tightening spending.

HMRC’s guidance:

Q.What will be the allowance for fuel used on boats for heating and lighting?

A.There is no fixed allowance. It is for the purchaser to declare the percentage of fuel used for propulsion. However, analysis by both the industry and HMRC suggests that a split of 60% for propulsion and 40% for domestic use (heating, cooking etc) probably reflects most people’s use and it is therefore likely that many users will declare such an apportionment. This will make it easier for suppliers (RDCOs) to work out additional duty and VAT. However, where a purchaser knows that their propulsion use may be more or less than the above apportionment split or a craft clearly has no domestic use, then they must declare their actual intended usage.

Q.What about residential boat owners where nearly all fuel is for domestic purposes – what can they declare?

A.We have recognised the status of residential boat owners whose primary residence is their boat. Some of these will be at fixed moorings or move just a very short distance along the tow path from permanent moorings. If they live aboard the craft permanently and hold certain documentation, such as a Houseboat Licence, Residential Mooring Licence, Council Tax Bill in respect of the mooring, or other peripheral documentation, invoices or bills which provides proof of permanent residency, they may purchase all their fuel at the rebated rate (as if they were a commercial vessel). They will still be required to make and sign a declaration saying that 0% of the fuel is for propelling purposes. It will be the responsibility of the declarant to ensure that they hold the requisite documentation should HMRC wish to check the validity of the declaration made in these circumstances. Continuous cruisers may not declare 0% under these arrangements, even if they reside permanently on their craft, they must declare their actual intended usage for propulsion.



Latest videos