The Government has published a response to the consultation on plans to end the availability of red diesel on its current basis -- an extract of the parts affecting pleasure craft is shown below. The full response can be read by clicking here .
Basically, they seem to have been swayed by arguments regarding difficulties in having separate supplies for commercial and private pleasure vessels. We will be able to buy red diesel and only the declared element used for propulsion will carry road fuel duty - as at present.
Private pleasure craft
At Budget 2020 the government announced that it would include enabling legislation in Finance Bill 2020 to prohibit the use of red diesel to propel private pleasure craft, and indicated that details on the implementation of this power would be set out in due course. This section sought views on the government’s proposal to introduce a new relief scheme to prevent private pleasure craft users from having to pay a higher rate of duty on their non-propulsion use than they would otherwise have to pay.
The majority of private pleasure craft users who responded to the consultation agreed with the government’s proposal to introduce a new relief scheme where approved fuel suppliers would be able to deduct the sale price the duty difference on the proportion of diesel intended for non-propulsion use. The few respondents who disagreed with the proposal suggested that the government should be looking to dis-incentivise the use of polluting fuels, so introducing a relief would be counterproductive.
The consultation sought views on whether a new relief scheme should be set as a fixed percentage to reflect most crafts’ use or capped at a maximum percentage, meaning that craft users that use less than the maximum for non-propulsion would claim back less. In the case of a fixed percentage, the consultation also sought views on whether a split of 60% for propulsion and 40% for non-propulsion use reflected most crafts’ typical fuel use, as suggested by previous analysis from industry and HMRC.
There were differing views from stakeholders who responded to these questions on the design of the relief scheme. Most fuel suppliers suggested that if a new relief scheme were to be introduced, it should be set at a fixed percentage of 60% for propulsion and 40% for non-propulsion to keep it simple. Private pleasure craft users and their representatives had more mixed views. Around half agreed with the majority of fuel suppliers to introduce a relief scheme set at a fixed percentage as it would be easier to administer, whilst a large minority preferred a relief scheme which more accurately reflected the amount of diesel they intended to use for non-propulsion, particularly in winter months when private pleasure craft users are likely to use more fuel for heating. Some respondents did not express a preference.
Craft with two fuel tanks
The majority of private pleasure craft users and their representatives who responded to question 22 agreed with the government’s proposal to allow private pleasure craft with two fuel tanks (one for propulsion and a separate one for non-propulsion) to be able to continue using red diesel in the non-propulsion tank, although they noted that only a small minority of craft have two tanks.
Following consultation, the government has decided to maintain the entitlement to use red diesel beyond April 2022 for all commercial boat operating industries, including but not limited to the fishing and inland water freight industries.
The government has therefore decided not to change the treatment of private pleasure craft in Great Britain, where they will continue to be able to use red diesel and pay their fuel supplier the difference between the red diesel rate and the white diesel rate on the proportion they intend to use for propulsion.
(Remaining parts of this section affecting pleasure craft relate to Northern Ireland)