It’s more good news for leisure boat owners as the British Marine Federation releases its own detailed guidance on the upcoming change in Red diesel duty rates.

As of 1 November, leisure boat owners will have to declare what percentage of any diesel purchase is intended for domestic use. Any fuel for propulsion will attract a new 50p per litre duty rate.

However the latest briefing from the BMF indicates that HM Revenue and Customs plans to add just 5% VAT to both domestic and propulsion fuel for boat owners – a reversal of its earlier declaration that propulsion fuel would attract 17.5% VAT.

The following example assumes a 60% (propulsion) and 40% (domestic) split for a purchase of 100 litres of red diesel (the price of diesel is assumed to be 0.70ppl which includes 9.69 ppl duty already paid to fuel supplier ):

Propulsion calculation (i.e. 60%)
60 litres @ 0.70ppl = £42
60 litres @ 0.4066ppl = £24.40 (additional duty)
VAT @ 5% = £3.32
Propulsion Total = £69.72

Domestic calculation (i.e. 40%)
40 litres @ 0.70ppl = £28
VAT @ 5% = £ 1.40
Domestic Total = £29.40

Transaction Total = £99.12
Source: HMRC