altendorff.co.uk

This blog is meant to restrict itself to all things electric, but I can’t help but comment on the polarising debate that is going on in the UK leisure boat sector with regard to red diesel.

For the sake of foreign readers there is a very low rate of tax on diesel for marine users in the UK which makes it about 40% cheaper than the same diesel being sold to car owners. The origins of this benefit are not clear but it is believed that it goes back to the 1930’s post war years. Some people have attributed the concession to Winston Churchill who, it is said, gave a tax concession on fuel to UK boat owners as a thank you for their participation during the D-Day landings.

In December 2006 the European Commission turned down the UK’s request for an extension to its derogation from the Energy Products Directive. This meant that UK boaters could no longer buy low-tax diesel.

Currently, derogations in the Council Directive 2003/96/EC allow five countries, including Belgium, Ireland, Finland, and Malta and the United Kingdom, to charge reduced rates of excise duty on red diesel, applying only to private leisure. From 1 January 2007, each litre of fuel used for leisure has to carry the minimum rate of EU duty of 21ppl.

Annual research undertaken by BMF/RYA/Sunsail shows that more than four million people participate in leisure boating and related water sports in the UK. Boating makes a significant contribution to tourism in all regions and employs approximately 30,000 people – mainly from SMEs.

The “No to higher tax” Lobby:

The RYA and the British Marine Federation are supportive of the fuel retailers position, and also have lobbied for a system of “self regulation” by leisure boat owners.

The fuel retailers and marina owners say that the ending of low-duty on red diesel will devastate motor boating in Britain. Suppliers in rural and remote areas have already said that they would not sell red diesel because they do not want to be burdened with the cost and bureaucracy involved in recording every sale to private recreational craft. I personally dont understand this since they already record every sale – that’s the law and also its good accounting practice !

Under a system of self regulation, recreational boaters would continue to purchase red diesel at the rebated rate, but would declare and pay the additional duty periodically.

The RYA has also urged Government to look seriously at reducing the rate of duty payable by recreational boaters on red diesel to the lowest possible rate, ideally the EU minimum rate.

The proposal at present is that red diesel would be taxed at the full, road fuel rate of duty – 54.68 pence per litre. This would probably get the retail price to approach the current road price of £1 per litre.

The “Yes to higher tax” Lobby:

Ancasta, the yacht broking company, have compiled data on the useage of the fuel made by sailors and motorboat users.

According to this survey:

1. The average motor boat engine has 60 hours use per annum.
2. An average 38 ft twin engined motorboat runs on full speed at 45 litres per engine, using 90 litres per hour for both engines.
3. If red diesel duty is doubled, and with VAT included, the added cost for an average use (60 hours per year) is £2,601 for a motor boat and it’s about £216 for a sailboat per annum.

Ancasta has produced its engine usage figures derived from over 22 years of experience of brokerage. Sales Director Ashley Overton says “We always calculate that if a boat is five years old, it will have 500 or less engine hours. In reality, looking at our records, the figure is nearer 60 hours per annum”…or 5×60 = 300 hours for a five year old motorboat…

Ancasta dont view this extra annual cost as being significant for those owning or about to purchase their new boat.

My view:

Fishermen and other commercial users will continue to use red diesel at its existing tax of 6.44p, so they are not directly affected other than by the possible reduction in retail outlets.

I dont like paying tax, but I dislike destroying the planet even more… we should pay up,…

This may incentivise marine diesel manufacturers to conduct more R&D into greater fuel efficiency such as the diesel hybrids that are being produced for the car industry..,

….motor boaters should switch to sail…… ok that last bit was just a dig – sorry