Budget Notes


Who is likely to be affected?

1. Suppliers and users of:

•    fuel for private pleasure-flying;

•    fuel for private pleasure-boating; and

•    waste oil as fuel, either directly after recovery or following a recycling process for waste oils .

General description of the measure

2. The UK's derogations from the Energy Products Directive (EPD) which permitted the use of reduced and exempt rates of duty on fuel used for the purposes of private pleasure-flying, pleasure boating and on waste oils re-used as fuel, expired on 31 December 2006 following a decision by the European Commission. On and after 1 November 2008 fuel used for these purposes will no longer benefit from the current reduced and exempt rates of duty. The following changes will instead be introduced.


3. Users of aviation turbine fuel (Avtur) for private pleasure-flying will be liable for the payment of duty to HM Revenue & Customs (HMRC) on a periodic basis. The duty rate will be 52.35 pence per litre. The supplier will be obliged to draw the attention of the purchaser to end-use liability. The purchaser will be required to make a declaration to the supplier if he intends to use the fuel for pleasure flying.

4. A new fiscal definition of aviation gasoline (AVGAS) with a free-standing duty rate will be introduced. The duty rate will be 31.03 pence per litre. This will apply to both commercial and private pleasure use so there will be no change to the current procedures.


5. The use of red diesel will continue to be permitted for pleasure boating but the supplier will be liable to account for and pay to HMRC an amount equivalent to the rebate allowed on the fuel. HMRC will continue informal discussions with stakeholders to consider an allowance for fuel used for the purposes of heating and lighting.

Waste oils

6. Waste oil recoverers will be treated as oil producers. A positive rate of duty equivalent to that for fuel oil, 9.66 pence per litre, will be introduced on heavy oil, which encompasses waste oils but only if supplied as fuel.

Operative date

7. The changes will have effect on and after 1 November 2008.

Current law and proposed revisions

8. Legislation will be introduced in Finance Bill 2008 to amend the Hydrocarbon Oil Duties Act 1979 (HODA). New sections on heavy oil used for heating and fuel used in aircraft and boats, and a new definition of aviation gasoline in section 1, will be added.

9. Statutory instruments will be made under the relevant sections of HODA.

Further advice

10. 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