Why are there two tax rates for marine diesel?

ari

ari

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Not got a boat anymore so not fuelled for ages. Anyway, was talking to someone recently who was telling me that there are now two tax rates for leisure marine diesel, 60% and 90%.

I thought the agreement had been reached at an "across the board" 60% for all boats, so why the 90% rate?
 
You can make the split anything you want. HMRC have said that they would regard a 60/40 split as a reasonable assumption to work on, and have hinted heavily that they won't question it unless they have grounds to do so (such as an open boat with no heater or generator). However, if you can prove that you use 90% of your diesel for heating or power generation and only 10% for motive power, then you can claim on that basis. Just accept the possibility of being asked to prove it /forums/images/graemlins/smile.gif.
 
I understood when I was being told about this that the two splits offered were the other way around, ie 90% rate was 90% motive fuel (higher tax) or 60% motive fuel (40% domestic) which equates to lower tax (ie cheaper fuel).

Which is why I'm confused as, like you say, my understanding was that a blanket 60/40 was now the accepted norm. /forums/images/graemlins/confused.gif
 
So has no one seen this or can shed any light at all on it?

Surely lots of you must fuel diesel boats, have you not seen two rates? /forums/images/graemlins/confused.gif
 
The split can be anything you want. As JHR has said the 'norm' is 60/40. The last time I filled at MDL they had a grid with a price for every 10% increment, i.e 100%, 90/10, 80/20 etc. At Berthons yesterday the guy worked it out by hand. A liveaboard mate of mine buys on the basis of 20/80. All I can suggest is that the supplier in question can't cope with the maths and has arbitarily decided to offer 60/40 or 90/10 pricing only, though I'd have thought that breached the HMRC guidelines which placed the onus on the buyer to declare.
 
I didn't reply earlier because you'd already had the answer from the first respondent.
I'll be declaring, quite reasonably, that my annual useage would work out at about 60% for propulsion and 40% for heating and battery charging. Mind you, we do keep the boat in the water for about 10 months a year.

Seems like a reasonable system to me, unless suppliers spoil it by either not understanding the arrangement or not wanting to bother with sliding scale calculations.
 
Well thank you for your responses.

Seems this arbitrary 60/40 across the board compromise split that I understood to be the arrived at agreement isn't the case after all then, and you just fill in what you estimate/guess/like?

How bizarre. /forums/images/graemlins/confused.gif
 
Not quite. The 60/40 split is clearly agreed as an appropriate default assumption to make by HMRC. They don't have the legal power to make this a binding rule but have indicated as clearly as they can that they won't take action against people using this split, under normal circumstances. Coming from HMRC that's virtually unheard of.

If you use another split that's fine - so long as you can justify it. If you're a liveaboard and you never move the boat you could, conceivably, continue to claim 100% duty free because you don't use the engines for propulsion. But - and I stress this again - you must be able to defend whatever assmption you use if HMRC come calling to ask questions.

Hope this makes sense - I am starting to confuse myself!
 
[ QUOTE ]
Not quite. The 60/40 split is clearly agreed as an appropriate default assumption to make by HMRC. They don't have the legal power to make this a binding rule but have indicated as clearly as they can that they won't take action against people using this split, under normal circumstances. Coming from HMRC that's virtually unheard of.

If you use another split that's fine - so long as you can justify it. If you're a liveaboard and you never move the boat you could, conceivably, continue to claim 100% duty free because you don't use the engines for propulsion. But - and I stress this again - you must be able to defend whatever assmption you use if HMRC come calling to ask questions.

Hope this makes sense - I am starting to confuse myself!

[/ QUOTE ]

Thanks JHR, that does make more sense yes.

Although it still doesn't explain why the fuel barge were running a 90% rate, seems no logical reason to pick that number (unlike 60% which as you say seems to be the unofficial agreed on split). /forums/images/graemlins/confused.gif
 
[ QUOTE ]
it still doesn't explain why the fuel barge were running a 90% rate

[/ QUOTE ] The only thing I can think of - and this is purely madcap theorising on my part, nothing more - is that it's the fuel barge's suggestion for RIBs, Dayboats and similar, where there's no separate generator or heater but one could argue that a proportion of the engine power is always being used to charge the batteries, hence some dispensation should be allowed. If so, it's completely down to them and doesn't carry the HMRC stamp of (unofficial) approval.

Otherwise, I haven't got a clue! /forums/images/graemlins/smile.gif
 
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