Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN53 Hydrocarbon Oils Duty: rates

Who is likely to be affected?

1   Businesses producing and importing hydrocarbon oils products.

General description of the measure

2   From 1 October 2007, excise duty on main road fuels will increase by 2 pence per litre (ppl). These rates will be increased by a further 2 ppl on 1 April 2008 and 1.84 ppl on 1 April 2009.

Main road fuels Current effective rate per litre () Effective duty rate per litre () Effective duty rate per litre () Effective duty rate per litre ()
  From 1 October 2007 From 1 April 2008 From 1 April 2009
Ultra low sulphur petrol (ULSP) 0.4835 0.5035 0.5235 0.5419
Sulphur-free petrol (SFP) 0.4835 0.5035 0.5235 0.5419
Ultra low sulphur diesel (ULSD) 0.4835 0.5035 0.5235 0.5419
Sulphur-free diesel (SFD) 0.4835 0.5035 0.5235 0.5419

3   From 1 October 2007 duty rates for unleaded petrol, for leaded petrol, for aviation gasoline and for other heavy oil used as road fuel will be increased by the same percentage as the main road fuels. Decisions on duty rates for these fuels in future years will be taken following consideration of the scope for simplifying the duty rate structure.

  Current effective rate per litre () Effective duty rate per litre ()
From 1 October 2007
Unleaded petrol that is not ULSP or SFP 0.5152 0.5365
Other light oil (including leaded petrol) 0.5768 0.6007
Aviation gasoline (AVGAS) 0.2884 0.3003
Heavy oil which is not ULSD or SFD (conventional diesel 0.5468 0.5694

4   From 1 October 2007 effective rates of duty (that is, the relevant duty minus the relevant rebate) for non-road fuels will be increased by 2 ppl to maintain the differential between rebated oils and main rates. These rates will be increased by the same percentage as the main road fuels on 1 April 2008 and 1 April 2009.

Rebated Oils Current effective rate per litre () Effective duty rate per litre () Effective duty rate per litre () Effective duty rate per litre ()
  From 1 October 2007 From 1 April 2008 From 1 April 2009
Light oil delivered to an approved person for use as furnace fuel 0.0729 0.0929 0.0966 0.1000
Marked gas oil and ultra-low sulphur diesel not for road fuel use 0.0769 0.0969 0.1007 0.1042
Fuel oil 0.0729 0.0929 0.0966 0.1000
Kerosene to be used as motor fuel off-road or in an excepted vehicle 0.0769 0.0969 0.1007 0.1042

5   The current duty differential of 20ppl for biofuels will be extended until 2009/10, in line with the alternative fuels framework.

Biofuels Current effective rate per litre () Effective duty rate per litre (£) Effective duty rate per litre (£) Effective duty rate per litre (£)
From 1 October 2007 From 1 April 2008 From 1 April 2009
Biodiesel 0.2835 0.3035 0.3235 0.3419
Bioethanol 0.2835 0.3035 0.3235 0.3419

6   The duty rate for blends of rebated gas oil with biodiesel will be set in 2008 following the assessment of the results of current and planned pilot trials. This will be a reduction from the current rate of 54.68ppl.

7   The duty rate for natural gas will increase to maintain the differential with main road fuels in pence per litre equivalents up to 2009/10. The duty rate for liquefied petroleum gas will increase to reduce the differential with main road fuels by the equivalent of 1ppl a year up to 2009/10, in line with the alternative fuels framework.

Road fuel gases Current effective rate per kg () Effective duty rate per kg (£) Effective duty rate per kg (£) Effective duty rate per kg (£)
From 1 October 2007 From 1 April 2008 From 1 April 2009
Natural gas (NG), including biogas 0.1081 0.1370 0.1660 0.1926
Road fuel gas other than natural gas - e.g. liquefied petroleum gas (LPG) 0.1221 0.1649 0.2077 0.2482

8   The duty differential applicable to biogas, equivalent to 40.88 ppl, will remain at least at its current level until Budget 2012.

Operative date

9   Will have effect on and after midnight on 30 September 2007; midnight on 31 March 2008; and midnight on 31 March 2009.

Current law and proposed revisions

10 The Hydrocarbon Oil Duties Act 1979 will be amended by the Finance Bill to implement those changes to come into effect on 30 September 2007.

Further advice

11 If you have any questions about this change, please contact the National Advice Service on 0845 010 9000. Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk