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16 July 2020

Changes to the Red Diesel Tax

The time has come for you to be able to, once again, return to your sailing adventures or look into buying a new yacht. Many of you may be wondering how the recent changes to the Red Diesel Tax will affect your travels. If this is you, we’ve answered some of the key questions surrounding this so that you can enjoy some much needed time sailing, free from stress. 

What is red diesel? 

Simply put, red diesel is ordinary diesel with red dye in it. This may seem strange to many, but there is a reason behind the use of red dye. 

Red diesel used to be tax free, used by fishermen and farmers in their traditional modes of transport, fishing boats and tractors. It was dyed red so that tax inspectors could tell if it was being used unlawfully, in a lorry for example. 

Fishing boats would restock their fuel from an onshore tank, this worked well until the 1970s and 80s prompted a huge influx in the industry for leisure yachts. It wasn’t too much of a problem, unless you travelled to an EU country where you could be fined for using red diesel in your yacht. The UK Government decided that in order to rectify the unlawful use of red diesel in a leisure craft, red diesel would be the same price as white diesel, and fishing boats would be able to claim the tax back. The two colour system is maintained in the UK as a way of telling the difference between taxed and untaxed fuel. 

What are the changes to the Red Diesel Tax? 

The changes, introduced in the Finance Bill 2020 relating to the propulsion of a private recreational craft, detail that white diesel must be used to fill the propulsion tanks of these yachts. 

However, if your craft has a separate tank for domestic use such as heating, then you can continue to use red diesel in that tank, just not in your propulsion tank. This has caused some concern for owners of boats with only one tank for propulsion and heating, and it has been said that the government will look into this and aim to provide a solution to prevent owners from having to pay a higher rate of duty in their heating use. 

How will this affect you? 

In summary, most will be paying full tax on diesel for use in their yacht anyway, the change should not affect the majority too much, other than having to use white diesel in your propulsion tank rather than red. 

Whilst some clarity needs to be provided surrounding the use of red diesel for domestic reasons in a boat without separate tanks, overall the changes should not have an overly negative impact on sailors and boat users. 

If you have any questions or concerns surrounding these changes, especially if you’re new to the boating world, we are happy to help. Either call our Brundall office on 01603 713434 or reach the Horning office at 01603 211033.

We’ll answer any and all queries, help you through every step should you wish to purchase a yacht, and ensure that you’re equipped with all necessary information to guarantee an enjoyable, safe time on your boat, creating precious memories that will last a lifetime.