Sailors are being urged to comment on Government plans to abolish red diesel for private pleasure craft. An eight week consultation is now underway

An eight-week consultation is underway on plans to ban red diesel to propel pleasure boats in UK waters.

It follows a ruling by the Court of Justice of the European Union (CJEU) in October 2018, which found that the UK wasn’t complying with the EU Fuel Directive by allowing leisure vessels to use marked diesel. A similar ruling has been made against Ireland, which has green diesel.

Under EU rules, fuel must be marked with a dye if it is sold at less than the full tax rate. In the UK, most marinas sell red diesel on a 60/40 split of full and lower tax rates for propulsion, and heating or power generation

The EU argued that this practice meant the UK was failing to fulfil its obligations under Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene (OJ 1995 L 291, p. 46).

HM Revenue & Customs had argued that ending the use of red diesel would be impracticable. But this was rejected by the CJEU.

Now the British Government intends to make to bring the UK’s practice into line with the Directive and seeks evidence about the impact of the changes on users of diesel powered craft and their fuel suppliers.

Consultation closes at 11:45pm on 9 September 2019.

The government intends to abolish the scheme introduced in 2008 that allowed users of diesel powered private pleasure craft (e.g. yachts, canal boats and motorboats) to purchase red diesel and pay the duty differential between red and white diesel on the fuel used for propulsion.

It intends to remove the right of operators of such craft to use red diesel for propulsion and mandate the use of white diesel.

Users will be allowed to continue to use red diesel for on-board non-propulsion use where they have a separate fuel tank for this purpose.

This means that craft with only one tank will pay more tax than they currently do as they will have to purchase fuel taxed at the higher white diesel duty rate for both propulsion and non-propulsion uses, and pay the standard rate of VAT as white diesel is not eligible for the reduced rate of VAT.

The consultation outlines how the government intends to implement the judgment by requiring private pleasure craft to use white diesel for propulsion, and seeks evidence regarding the impact this will have on users of diesel propelled craft.

It can be found here:

The responses will be used to help determine whether a period will be required for suppliers, known as Registered Dealers in Controlled Oils (RDCOs), and users of diesel fuel to adapt to using only white diesel for propulsion of private pleasure craft and, if needed, the length of any such period.

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Both the RYA and the Cruising Association are urging all sailors to respond to the consultation. The RYA is arguing that the CJEU judgement should not be implemented in the event of a no deal Brexit.

Boaters should experience no change in respect of their use of red diesel both in the UK and overseas until the UK Government makes changes to existing legislation.

The RYA will be lobbying for any new legislation to include a transition period of sufficient length to recognise that changes will need to be made to the supply system and that the marker dye in red diesel will be detectable in boat fuel systems for a considerable period of time after the commencement date of any change to the use of white diesel.

The Cruising Association is urging all UK boaters who use diesel fuel to respond directly to these questions. HMRC has made it clear that it will only accept responses from individuals, and not a compilation of responses.