4 RED DIESEL UPDATE
The government has finally published the results of its 2019 consultation on red diesel use by private pleasure craft (PPC). The seven-week investigation, conducted from mid-july 2019 through to early September 2019, was followed by Chancellor Rishi Sunak’s 2020 Budget declaration to end the use of red diesel in all sectors except agriculture, rail and non-commercial heating by April 2022.
The red diesel concession for off-road usage, including leisure boats, began in 1961, but since the last change to fuel rebate legislation in 2012, UK boaters have had to pay full fuel duty on the diesel they use for propulsion but a lower duty for the fuel used for heating or power-generation on board. In the absence of separate tanks or gauges, a pre-agreed split of 60:40 has been deemed acceptable, meaning leisure boat owners have only been paying full duty on 60% of the fuel they buy.
The 2019 consultation noted that the proposed changes were opposed by the vast majority of respondents, including fuel suppliers, as well as owners and users of fuel docks. In all, HMRC received 1,601 responses: 1,469 from owners and users of private pleasure craft and 127 from those supplying fuel to PPC owners and users
(26.6% of all PPC fuel suppliers).
BOAT OWNERS’ RESPONSES
■ Around a third asked whether the UK’S exit from the EU would change policy.
■ Nearly 40% estimated that it would take between six months and a year to use up the red diesel in their tanks following any prohibition.
■ All confirmed they use their boats predominantly in the summer. Very few use them in the winter. Most said they maintain a full tank of fuel over the winter months to prevent condensation.
■ Nearly all expressed concern that fuel suppliers in areas of the UK coastline that were used predominantly by commercial craft would not supply white diesel after red diesel use was prohibited for PPCS, which would make it impossible for them to refuel legally in these areas.
■ Virtually all PPC owners and users stated they were concerned the prohibition would lead to them not being able to refuel with white diesel at marinas with just over half stating they would have to buy from roadside filling stations and transferring via ‘jerry cans’.
■ Nearly all PPC owners and users highlighted the problem of residue red dye in their tanks following the prohibition and were concerned about the impact this would have on them being able to prove they had purchased the correct fuel after the prohibition’s introduction.
■ Of the 863 PPC owners or users that gave reasons why they were not in favour of implementing the proposal, approximately
40% stated it would not be possible to fit a separate tank for domestic use on board and so they would be forced to use white diesel for this purpose as well as propulsion, which means they would actually be paying more than necessary.
■ Over half of PPC owners or users favoured an ‘adjustment period’ of between two and four years. One-third suggested the period should be more than four years.
■ Just over 10% suggested an alternative solution to the proposed prohibition if the current system could not continue.
FUEL SUPPLIERS’ RESPONSES
■ Those that currently supply red diesel to PPCS highlighted the significant expense of converting fuel tanks from red to white diesel.
■ Just over half only have a single pump.
■ Nearly half stated they would continue to sell red diesel only. Approximately 20% said they would switch to white diesel only.
■ Of those suppliers prepared to offer red and white diesel, 40% estimated it would take between one and two months to adjust their infrastructure; and a further 40% estimated it would take between six and 12 months.
■ A number of fuel suppliers suggested introducing a new category of ‘marine diesel’ for use in all craft.
HM Treasury has launched a final consultation, closing on 1 October 2020. The government will publish a summary within 12 weeks and draft legislation for consultation in 2021.