The fight for derogated diesel has been lost :-(

It was decided by the EU that red diesel will no longer be available to recreational boaters. The special exemption that allowed the UK to charge lower rates of duty on diesel for private pleasure craft will come to an end on the 31st December 2006. The RYA and UK government has fought against this, but to no avail.

The European Union has adopted a Directive that restructures the taxation of energy products, including diesel, in order to reduce perceived distortions of competition between Member States.

At present diesel fuel for use in private pleasure craft is subject to duty at 4.22p per litre and to a reduced rate VAT at 5%. The derogation that allows this reduced duty rate expired on 31 December 2006. From 1st November 2008, marine diesel will be in the region of £1 a Litre, from the current £0.60 mark.

What happens now? Well, from the 1st November 2008:-

• Private users can continue to use marked fuel (red diesel) providing they make a simple declaration to the supplier and pay the full duty rate for heavy oil;

• Registered Dealers in Controlled Oils (RDCOs) will be responsible for declaring the duty collected to HMRC; and,

• Fuel purchased for domestic use (i.e. not for propulsion of the craft) can continue to be purchased at the rebated rate.

This means that existing outlets can continue to sell Red Diesel to boat owners after 1st Nov 2008 and that you can have it in your tanks, however you do need to ensure that you obtain a suitably endorsed receipt and keep it for inspection. For vessels with diesel powered heating systems that run off their main tank, they will still be entitled to purchase it at the rebated price, but only for heating. What this will mean to our friends in the Dutch Revenue service that have already been fining British vessels with Red Diesel in their tanks, remains to be seen...

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