Red diesel duty confirmed as 60/40 split

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Whitelighter

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So by my maths this makes the payable duty at the pump of £0.34/litre.

The minimum duty set by the EU was £0.27/litre so I think this is about as good as we could have hoped for. Its not quite the minimum, but its a damn sight better than it could have been and it certainly looks like HMRC have made a very sensible move.

Please can we now not jeapodise this result by abusing it with stupid claims or reckless suggestions. This should see marine diesel remaining below £1.00/litre if the current price of around £0.71/litre (at the decent marinas) continues.

Not great, but a lot better than the £1.50/l plus that we all thought was a realistic possibility.
 
Thanks Jez. It reads to me as a 60/40 "safe harbour", something that HMRC are very used to in other areas of tax. Basically you will never get challenged if you declare 60/40 but you are free to exceed 40% non propulsion if your circumstances dictate and of course you should then keep records (liveaboards etc).

This single announcement today is the most significant in all these 3+ years of doom-gloom over red diesel. It's just a fantastic result. Crack open some champagne
 
[ QUOTE ]
So by my maths this makes the payable duty at the pump of £0.34/litre.
Please can we now not jeapodise this result by abusing it with stupid claims or reckless suggestions. This should see marine diesel remaining below £1.00/litre if the current price of around £0.71/litre (at the decent marinas) continues.


[/ QUOTE ]

Sorry but my maths isn't that great but doesn't £0.71/litre plus £0.34/litre = £1.05/litres, which is actually over a £1/litre??? Not that it matters.!! /forums/images/graemlins/grin.gif

As you say its a dam sight better than £1.50/litre if its true.

Cheers

Al.
 
no, because the current £0.71/litre includes duty at 9.96p per litre. The difference is therefor £0.241/litre which added to £0.71 = £0.95/litre, which is under a quid /forums/images/graemlins/tongue.gif
 
Hi JFM,

If I read it correctly, so long as you declare a 60/40 split (or less of course) then there is no requirement for a boat owner to keep any records. Should you need to claim a greater amount than 40% for non propulsion then you can, but you are liable for inspection by HMRC so must keep records to justify your declaration.
 
Yup, agreed (I edited my post having read the announcement).

I think this is the final bit of the jigsaw now in place. It's the most significant announcement of them all. Great result. Thanks for the info
 
Result or what? 60/40 and no records! To be honest I don't think anyone can complain. The RYA and the BMF have been heavily criticised in the past for sitting on their hands but I think they should be heartily congratulated for this and a pat on the back for HMRC (that's really difficult for me to say!) for being reasonable. My guess is that there will be a few UK boat dealers and brokers who will be feeling a bit happier at SIBS this morning
 
Hi Jez,

That's more or less spot on. HMRC haven't ruled out random checks of boats that delcare 60/40, but as long as you've got some appliances on board that use diesel for 'domestic purposes', then that should satisfy them.

If you want to declare a greater domestic proportion you can, but you'd better be able to prove it.

Agree with comments above that this is the best we could have hoped for.

Stewart
 
Agreed Deleted User. Yes, congratulations and thanks due to the negotiators. In the circs, it is a fantastic result. Remarkably commercial/reasonable action on hmrc's part. Maybe Dave Hartnett has got a big triple engined Sunseeker or something :-)
 
Not by my calculations -

[ QUOTE ]
So by my maths this makes the payable duty at the pump of £0.34/litre.

The minimum duty set by the EU was £0.27/litre so I think this is about as good as we could have hoped for. Its not quite the minimum, but its a damn sight better than it could have been and it certainly looks like HMRC have made a very sensible move.

Please can we now not jeopardise this result by abusing it with stupid claims or reckless suggestions. This should see marine diesel remaining below £1.00/litre if the current price of around £0.71/litre (at the decent marinas) continues.

Not great, but a lot better than the £1.50/l plus that we all thought was a realistic possibility.

[/ QUOTE ]

I think you may have ignored the VAT element.

My figures suggest (based on the current price at 89ppl.) that a litre of oil would cost £1.23 which is about what one pays at the pump for road fuel, whereas if the 5% VAT was retained it would be £1.14, which makes more sense as it is a lower quality fuel (allegedly).

I must say HMRC have neatly bypassed the question of a fixed rate being imposed by themselves, by shifting the burden (if any) on to the dealer.

That's a master stroke! Everyone should be happy, if you disagree, you can always declare otherwise, but I wouldn't be surprised if dealers said take it or leave it if you don't accept the "standard".
It's very good news for the big boats, but not so good for inland waterways, especially where so many are used as weekend cottages.

Edit:
Just to come back - everyone has ignored the VAT addition, all your prices are based on fuel at 70p (how may dealers are selling it at that price now??) and VAT at 5%. You have to add VAT on the total fuel + new duty, which brings it up to my £1.23 at the more widespread price of 88ppl (or thereabouts). That way it's about current DERV prices, so it's not really that generous, just not penal. After all petrol boats have been paying that style of price for ever.
 
Re: Not by my calculations -

I agree that VAT has to be taken into account. Based on a base fuel cost of 74p (meaning 88p after current rates of duty and VAT), £1.23 would be the result on a 60/40 split with VAT at 17.5% on the fully dutied 60%. i.e. I agree with your calculation as well. /forums/images/graemlins/ooo.gif
 
Re: Not by my calculations -

Ok, I did forget the VAT. The VAT is not 17.5% on the whole amount though. If you read the report in full, VAT is 17.5% on the propulsion bit and 5% on the domestic bit. That means a total VAT of 12.5%. I will use £0.71/litre cos thats what I pay at Chichester marina and at Lymington marina.

So, if oil supply costs remain the same (they are falling after all) then a litre of marine derv will cost:

Diesel @ £0.584
Domestic Duty @ £0.039
Propulsion Duty @ £0.302
VAT @ £0.116

Total cost of fuel inc VAT should therefor be £1.041/litre.

so the VAT accounts for 9ppl which is a pain, but its much easier to be VAT registered and claim it back than go down the commercial route which was the only option before.
 
[ QUOTE ]
Maybe Dave Hartnett has got a big triple engined Sunseeker or something :-)


[/ QUOTE ]

If he has, it'll be thanks to the bonus he received for his barstewards screwing so much money out of me over the last few years /forums/images/graemlins/mad.gif
 
:-) Alas I was definitely kidding. I have met him (indeed, I've argued and shouted "How dare you!" and suchlike across the table at him for many hours of my life, in an effort to keep the private equity industry in the UK so it can continue to pay more tax than a cleaner) and he doesn't strike me as a triple sunseeker kinda guy... :-)
 
Re: Not by my calculations -

Jez, your VAT at 12.5% is not quite correct as the "blended" VAT rate changes with the base fuel cost due to the fact that the duty is a fixed amount rather than a percentage but, at the fuel costs your using, it doesn't make much difference.
 
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