Red diesel VAT twist confirmed by HMRC

Red diesel will now be around 9p cheaper than previously thought

The tale of red diesel has taken another dramatic twist with confirmation that all the fuel you take on from 1 November will be hit with just 5% VAT.

This is an abrupt shift in position from HM Revenue & Customs after briefing previously that 60% of your fuel would attract full VAT of 17.5%.

The decision does not affect the duty to be applied to red diesel after 1 November. Propulsion diesel will still attract a duty of 50.35 pence per litre.

The reason for the about face is not known at present, but it is good news for boaters, and should mean prices stay below £1 a litre based on a current pump price of 70ppl.

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MBM is now seeking an explanation from HMRC, which has spent the last six months telling journalists and the boating industry to expect a full rate of VAT on a big slice of leisure boat fuel.

An HMRC insider said there had been “some confusion” with different versions of the brief, the correct version of which can now be seen on HMRC’s website.

The timing of this news certainly couldn’t be more awkward for MBM, coming as it does just days after the November issue went to the printers containing HMRC’s previous position.

But while the VAT information in the issue may now be inaccurate, the rest of the information remains correct.