Could this be the end of red diesel?
IT WOULD seem that waterways users have lost the fight over red diesel according to the consultation on reforms to the tax treatment of red diesel and other rebated fuels published in July by HMRC. In it the Government has confirmed that only white, fully taxed, diesel can be used to propel boats.
If your boat is fitted with separate tanks for heating and propulsion fuel, you will be able to continue to use red diesel for heating and battery charging (this is assuming you are not using the battery power to propel the boat). The question will be if businesses will want to invest in having separate fuel pumps for both types of diesel?
The Canal & River Trust made the following statement: “The proposals will have implications for the trust where red diesel is used on our own fleet. As proposed the removal of its use will increase fuel costs for the trust, although given that our fleet is not huge, the impact will be manageable.
“It is positive that the Government appears to have recognised that for boats which use red diesel for domestic heating, most do not have separate fuel tanks so the initial proposal requiring separate tanks for heating (red diesel) and propulsion (white diesel) would have been prohibitively expensive.
“There now seems to be a tentative acceptance that a partial rebate for those with a single tank who use red diesel for domestic heating might be approved. However, this would only be eligible for those with a permanent mooring.
“Boaters with moorings are most likely to be able to access shore-based power, whereas those liveaboard boaters without a mooring are entirely dependent on fuels such as diesel to provide heating. If this partial exemption is implemented those without a permanent mooring would be more disadvantaged given they would not be eligible to this partial rebate for the domestic heating part of their diesel use.
“For those who currently supply fuel, the requirement to have separate tanks for red and white diesel would have made this prohibitive. If the Government does allow partial rebate on white diesel for use in domestic heating, then this would allow suppliers to operate with one tank.
“There would, however, be an additional cost to suppliers of having their tanks flushed out to remove any residual trace of red diesel to ensure no crosscontamination with white diesel and there would be additional administration for suppliers who would have to claim back this partial rebate from HMRC.”
“There may be alternative solutions to be considered such as – following the recent DfT call for evidence on reducing emissions from recreational boats – moving the rebate to the new brand of green diesel which has lower emissions and so would meet the EU obligation and government aims for reducing emissions without causing significant hardship to boaters.”
The trust has forwarded details of the consultation to the national boating organisations (RBOA, NABO, AWCC, NBTA) and the elected boater reps to Trust Council as they are best to respond on behalf of their members and to encourage their members to respond directly to the consultation.
The RYA (Royal Yachting Association) is also looking for input from its membership. It recently stated: “The RYA supports a move to increase energy efficiency in the short term and to develop a pathway to zero carbon for all sectors in line with UN goals. The RYA’s case for retaining red diesel is about existing supply needs, not colour, tax status or price.”
Recreational boaters already pay the full rate of duty and VAT when purchasing fuel for the purposes of propulsion. RYA will, therefore, be looking at the proposals to reform the tax treatment of red diesel closely to see how this might affect the supply of fuel for recreational use for both propulsion and how it will impact supply for domestic usage such as heating.
The further west and north you travel in the UK the more likely it is that you will have to rely on waterside outlets that only supply red diesel for commercial purposes, such as to fishing fleets. In many places, some remote, the limited quantities of fuel used by recreational craft do not warrant the cost of installing additional equipment to supply white diesel for the recreational boating sector.
If the Government removes the entitlement to use red diesel from most sectors from April 2022 and white diesel is consequently made as widely available as red diesel is now, then the supply of fuel will not be affected.
The RYA will be responding to this call for evidence and urges users of diesel-propelled craft, particularly private pleasure craft, and those involved in the supply of fuel to UK craft to participate in the consultation.
British Marine is also encouraging its members to visit a dedicated red diesel page on its website for more information on the survey which it is looking to publish. It will also be consulting its members and issuing a survey to help inform its response to HMRC’s consultation.
BM’s website states: “We will consult on the cost differential between red and white diesel, the continued use of the 60:40 split and the impact of the changes on suppliers. We will also continue to work closely with Government departments to ensure that members have all the appropriate guidance they need to understand the new requirements.
“We have, for some time, expected to see this, so it hasn’t come as a shock, and there would still seem to be a lot of consultation going on. So if you want to get involved and have an input to the way forward visit the websites of the various organisations and look for the links to the red diesel pages.”