Red Diesel: no HMRC decision yet
Howard Pridding: 'fighting hard fro boaters and the industry'
RED DIESEL: As the 1 November deadline for the new price of red diesel approaches, the newspaper stories are becoming more scary, with Southampton's Southern Daily Echo's headline asking 'Is it the end for pleasure boating?'
As a result, the duty on red diesel will rise from 9.7p to 50.35p per litre. At the same time, VAT will increase from 5% to 17.5%. But with the price of oil fluctuating over the past few months, the final figure for a litre of red diesel is still subject to speculation rather than official declaration.
Some experts say the combined effect will be to raise the cost of the fuel from 70p a litre to about £1.27.
After the decision was made not to insist on separate tanks and pumps for red and white diesel, the next controversy was how the extra duty would be collected. This argument has, itself, been clouded by the insistence that - especially with inland waterways craft - a great deal of diesel is used for boat heating rather than propulsion. Heating fuel will attract duty at the rebated rate.
At one stage it seemed HMRC had accepted that a split of 60% propulsion and 40% heating would be applied to all diesel purchases, leaving the retailer to apply the relevant rate of duty to the relevant portion of the purchase. This might seem a trifle unwieldy and unwelcome to the average fuel pontoon jockey.
The additional cost of fuel will undoubtedly hit leisure boating, although the amount of change is debateable. With the average use of an engine put at 50 hours a year, the additional cost may not put off the average marina weekender. Those who actually use their boat - and those at a shoestring level - will obviously be hurt.
The hire boat industry will have to raise its prices to cover the cost of the fuel, making a narrowboat holiday not quite such great value for money. The hope here must be that the credit crunch has hit foreign holidays hard enough to still make a gentle inland waterways holiday at 4mph a relaxing and worthwhile affair.
But even the RYA has little idea of the extent and affect of the price hike, with Gus Lewis, its legal and government affairs manager, saying: 'Clearly it will have an affect, although it's difficult to tell what that will be given that the price of fuel is rising rapidly anyway.'
Howard Pridding, executive director of the BMF, told BB: 'Along with the RYA and IWA we are still in constant negotiations with HMRC. The price of diesel will rise on 1 November and not before, however we are continually fighting hard on behalf of boaters and the industry and are awaiting the announcement regarding the implementation and the percentage split.'
BB thinks HMRC is leaving things a bit late for a 1 November deadline…
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