HMRC launches Red Diesel Consultation

Red Diesel © RYA

HMRC is seeking information about the proposed changes to the rules surrounding the uses of red diesel.

At this year's Spring Budget, Chancellor Rishi Sunak shared plans to review the current use of red diesel, and as such announced that he would be launching a consultation with red diesel users later in the year. During the Budget the Chancellor also shared plans for the intended removal of entitlement to use red diesel from April 2022, except for the agriculture sector (including forestry, horticulture and fish farming), railways, and where red diesel is used to power non-commercial heating systems, such as in homes, narrowboats and places of worship.

The anticipated red diesel consultation has now been launched by Government and seeks to gather evidence as to whether other sectors, including recreational boating, should be allowed to maintain use of the fuel beyond April 2022.

The decision by the Government to withdraw red diesel from wider use has been motivated by their intention to tackle climate change by incentivising businesses to improve the energy efficiency of their products.

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.

The 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 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.

Have your say on the future of red diesel here.

The consultation closes at 11.45pm on 1 October 2020.

Read more about the RYA's lobbying developments with red diesel.

If you have any questions regarding red diesel or any other current affair issues please visit the Current Affairs page on the RYA website or email .