Response to an e-petition to save Red Diesel for leisure boaters

28 February 2005

As you will know, private pleasure craft with diesel engines are entitled to use rebated gas oil or red diesel, which is specially marked to distinguish it from diesel used as road fuel. This is diesel which bears a reduced (or rebated) rate of excise duty of 5.22 pence per litre compared with 47.10 pence per litre for diesel used on the roads. Red diesel can also be used in certain off road vehicles, such as most agricultural vehicles and machinery, vehicles employed in motorway construction, forestry, mining and quarrying, and diesel locomotives, as well as commercially and privately owned boats.

Under the relevant European agreements (currently the Energy Products Directive, which came into effect on 1 January 2004), fuel used by private pleasure craft is normally taxable at the same rate as the equivalent road fuel. However, the United Kingdom enjoys a derogation from this provision, and this allows private pleasure craft to continue to use red diesel. This derogation is due to expire on 31 December 2006, although we will have the opportunity to apply for an extension.

We have read your comments with interest. We can assure you that your views, as well as those who have signed the petition on the Motor Boats Monthly's website, will be taken into consideration, along with other relevant economic, social and environmental factors, when we take decisions on the future duty treatment of red diesel for use in pleasure craft in the run up to the expiry of the current derogation in 2006.

You may know that Officials from Customs and Excise have already met with representatives from the Royal Yacht Association and British Marine Federation about this matter. Officials will, of course, be happy to meet any other national associations or trade bodies to discuss this issue. They should call Tim Smith from HM Customs and Excise at Timothy.Smith@hmce.gsi.gov.uk if they wish to arrange such meetings.