Red/White diesel costs and duty

[Bob Blues]

I was in the Milton Keynes Marina Offices yesterday and they were taking a new shipment of Red Diesel. The new cost it all was quoted at 99.9 p with a duty figure of £1.49 a ltr. eeek!

 

So I thought this is cheaper if I get my propulsion diesel at Tesco or Asda (1.39) and bring back 2 * 20 ltr Jerry cans. This then prompted a question. If I fill up at a marina and say to Mr Red Diesel supplier I want 100 lts red at 0/100 as I put in white diesel for propulsion can they insist you take the 40/60 split? Do I have to prove I put in White diesel?

 

The other thing is if I can put white diesel in my boat, if I paid duty on my red diesel why cant I put it in my car. I can prove I have paid duty why is if against the law. Not that I want to now if it's more expensive!

 

Bob B

[nb Innisfree]

I was in the Milton Keynes Marina Offices yesterday and they were taking a new shipment of Red Diesel. The new cost it all was quoted at 99.9 p with a duty figure of £1.49 a ltr. eeek!

 

So I thought this is cheaper if I get my propulsion diesel at Tesco or Asda (1.39) and bring back 2 * 20 ltr Jerry cans. This then prompted a question. If I fill up at a marina and say to Mr Red Diesel supplier I want 100 lts red at 0/100 as I put in white diesel for propulsion can they insist you take the 40/60 split? Do I have to prove I put in White diesel?

 

The other thing is if I can put white diesel in my boat, if I paid duty on my red diesel why cant I put it in my car. I can prove I have paid duty why is if against the law. Not that I want to now if it's more expensive!

 

Bob B

 

They can sell at whatever split they like provided it's marked clearly before you refuel.

 

I don't think it's illegal to use red in a road vehicle as long as the duty is paid.

[alan_fincher]

Much debated.

 

A canal-side outlet can chose to let you say what your expected split is between propulsion and non propulsion. Most do.

 

But (apparently) they don't have to, and some will only do business with you if you are prepared to say your intended split is 60% propulsion / 40% other.

 

You cannot put red diesel you have bought as "propulsion" Marine diesel in your car, because.....

 

1) You have declared it as for use in propelling a boat.

 

and (as an aside).....

 

2) Apart from the excise duty on the fuel, you will have only paid the reduced rate of 5% VAT on it, not the 20% you have to pay on (white) road diesel....

[Bob Blues]

They can sell at whatever split they like provided it's marked clearly before you refuel.

 

I don't think it's illegal to use red in a road vehicle as long as the duty is paid.

 

Well I thought so too but, I Was told if the Customs and Exscise find Red in your car it's £1000 per ltr fine. but Ive paid duty on it .....

 

Bob B

[alan_fincher]

I don't think it's illegal to use red in a road vehicle as long as the duty is paid.

It is.

 

see above - you will not have paid enough VAT on it for road use, for starters.....

[petalponk]

Just a slight aside, but is it ok to mix white and red diesel? i mean would it cause any problems?

[ditchcrawler]

I was in the Milton Keynes Marina Offices yesterday and they were taking a new shipment of Red Diesel. The new cost it all was quoted at 99.9 p with a duty figure of £1.49 a ltr. eeek!

 

So I thought this is cheaper if I get my propulsion diesel at Tesco or Asda (1.39) and bring back 2 * 20 ltr Jerry cans. This then prompted a question. If I fill up at a marina and say to Mr Red Diesel supplier I want 100 lts red at 0/100 as I put in white diesel for propulsion can they insist you take the 40/60 split? Do I have to prove I put in White diesel?

 

The other thing is if I can put white diesel in my boat, if I paid duty on my red diesel why cant I put it in my car. I can prove I have paid duty why is if against the law. Not that I want to now if it's more expensive!

 

Bob B

They can't make you declare a 40/60 split, no one can. You can't prove you have paid duty on the red you put in your car, you can show a receipt of duty paid red diesel but you can't prove that is what you have put in your tank, you could have been putting duty free in for years.

[nb Innisfree]

It is.

 

see above - you will not have paid enough VAT on it for road use, for starters.....

 

In that case you haven't paid the full rate of tax, I have always understood the offence is evasion of tax not what fuel you use?

[Bob Blues]

Much debated.

 

A canal-side outlet can chose to let you say what your expected split is between propulsion and non propulsion. Most do.

 

But (apparently) they don't have to, and some will only do business with you if you are prepared to say your intended split is 60% propulsion / 40% other.

 

You cannot put red diesel you have bought as "propulsion" Marine diesel in your car, because.....

 

1) You have declared it as for use in propelling a boat.

 

and (as an aside).....

 

2) Apart from the excise duty on the fuel, you will have only paid the reduced rate of 5% VAT on it, not the 20% you have to pay on (white) road diesel....

 

Thanks Alan, I guessed that was the issue with VAT but then the question is Why is propulsion diesel so much more expensive then road.... Even with out the extra VAT.. So I say no thanks to 60/40. Ohh can I have it in Jerry cans please as I'm tied up on the cut for Heating only!

[alan_fincher]

Just a slight aside, but is it ok to mix white and red diesel? i mean would it cause any problems?

Since Jan 1st, any red diesel sold for boat use should be ULS (ultra low sulphur), making it near identical to "white" "road" diesel, (aka "DERV"), which has has to be uls for many years.

 

The differences are the dye, (irrelevant), and that road fuel must contain a percentage of biodiesel, whereas canal-side diesel may, or may not. I have talked to one trader who has not been able to get a definitive answer from their wholesaler whether the ULS "red" they are now receiving contains biofuel or not, so that's how clear-cut it all is :banghead".

 

Some think that a biofuel component, coupled with length diesel gets stored on boats, versus cars, may give higher incidence of diesel bug.

 

The issue is not mixing, however, it is simply whether a biofuel component may cause any problems or not. I think it is fair to say that the potential is there for greater contamination issues, but it's largely unproven.

 

I guess by a few months time we will have a better picture!

 

but then the question is Why is propulsion diesel so much more expensive then road....

Canal-side sales are massively smaller volumes than large garage forecourts.

 

Deliveries of diesel to a marina will be a small part of a lorry, normally, not a whole big tanker.

 

Cars are filling up all the time, boats only a handful per day, quite often.

 

The marina can not hope on the fully taxed diesel to match a Tesco or Morrisons forecourt price.

 

It's mostly to do with scale and profitability.

 

Some supermarkets, for example make very little on their fuel, but like to lure you to their shop with "low" (!!!) forecourt prices.

 

In that case you haven't paid the full rate of tax, I have always understood the offence is evasion of tax not what fuel you use?

You have not understood my reply, I think......

 

Even on propulsion "red" you only pay 5% VAT. On road fuel you pay 20% VAT.

 

That's how it works - you are not required to pay 20% VAT on diesel you use to propel a narrow boat. But it may work out cheaper to use road DERV where you have......

[Bob Blues]

 

Some supermarkets, for example make very little on their fuel, but like to lure you to their shop with "low" (!!!) forecourt prices.

 

I'd rather be lured with the offer of cheap beer.

 

Bob B

[nb Innisfree]

Well I thought so too but, I Was told if the Customs and Exscise find Red in your car it's £1000 per ltr fine. but Ive paid duty on it .....

 

Bob B

 

You can use dyed fuel in a road vehicle in special circumstances, HMRC can say yes or no but you would need to be registered with them and they would require lots of info such as where you are storing fuel and why and where you need to use it. You would then probably have to pay up front. They have the last word.

 

 

You have not understood my reply, I think......

 

Even on propulsion "red" you only pay 5% VAT. On road fuel you pay 20% VAT.

 

That's how it works - you are not required to pay 20% VAT on diesel you use to propel a narrow boat. But it may work out cheaper to use road DERV where you have......

 

I've just looked it up, it seems you can in theory use dyed fuel in a road vehicle, which makes me technically right I think but in practice a non starter.

 

Waiting for Mayalid to step in and clear it up!

Edited March 22, 2011 by nb Innisfree

[Justme]

Canal-side sales are massively smaller volumes than large garage forecourts.

 

Deliveries of diesel to a marina will be a small part of a lorry, normally, not a whole big tanker.

 

Cars are filling up all the time, boats only a handful per day, quite often.

 

The marina can not hope on the fully taxed diesel to match a Tesco or Morrisons forecourt price.

 

It's mostly to do with scale and profitability.

 

 

 

 

So why can I buy 500-1200L at a time at 65p (todays price) plus 5% VAT?

(for agri / forestry use)

 

I would guess that all marinas order far more than that at a time.

Plus we are quite remote so we have a lack of suppliers to keep prices down.

[ditchcrawler]

So why can I buy 500-1200L at a time at 65p (todays price) plus 5% VAT?

(for agri / forestry use)

 

I would guess that all marinas order far more than that at a time.

Plus we are quite remote so we have a lack of suppliers to keep prices down.

A good question.

I use to buy white diesel for use in the Landrover and Diesel car and use to save quite a bit against the garage price, but got frightened by the amount of money sitting in a tank beside the drive.

[Alan de Enfield]

So why can I buy 500-1200L at a time at 65p (todays price) plus 5% VAT?

(for agri / forestry use)

 

I would guess that all marinas order far more than that at a time.

Plus we are quite remote so we have a lack of suppliers to keep prices down.

 

I buy 1000L lots of Red for golf course use - current price £0.68 + 5% VAT.

 

(Questions - I dont know the answer)

 

1) Is 'Agricultural' red diesel subject to any duty ? (I think not)

 

2) Maybe the difference is the infrastructure / storage costs + margin plus the marina will have to pay VAT on their sales at 20% (If they pay 5% VAT back to the Government the following calculation is rubbish)

£0.68 + 5% = £0.714 of which the marina will reclaim the 5% (input Tax) so the nett price is £0.68.

They sell at £0.99 and pay the Government £0.20 in VAT (output tax) so actually achieving a nett of £0.11p / litre (or 14% margin) less the costs of storage, electricity to pump it, labour to pump it depreciation of assets (tanks and pumps)etc. etc.

[Bob Blues]

 

Is 'Agricultural' red diesel subject to any duty ? (I think not)

 

So Off to a Local Farmer with a load of Jerry cans saying I want to buy some of your red Diesel then

 

Bob b

[Naughty Cal]

Just a slight aside, but is it ok to mix white and red diesel? i mean would it cause any problems?

 

It has yet to cause us any problems. We have mixed red and white diesel for two and a half years now.

[Justme]

 

1) Is 'Agricultural' red diesel subject to any duty ? (I think not)

 

2) Maybe the difference is the infrastructure / storage costs + margin plus the marina will have to pay VAT on their sales at 20% (If they pay 5% VAT back to the Government the following calculation is rubbish)

£0.68 + 5% = £0.714 of which the marina will reclaim the 5% (input Tax) so the nett price is £0.68.

They sell at £0.99 and pay the Government £0.20 in VAT (output tax) so actually achieving a nett of £0.11p / litre (or 14% margin) less the costs of storage, electricity to pump it, labour to pump it depreciation of assets (tanks and pumps)etc. etc.

 

Red for agri has a reduced (but not zero) duty. If I bought heating fuel (yellow) it would be about 10 pence cheaper per L.

 

 

VAT of the domestic bit should be at 5% just like all heating & electric domestic fuels. So the VAT does not affect the economics.

 

Oh & the VAT on 99p is 16.5p not 20p.

 

So if they pay the same for the fuel as you & me they make 14p per L. I am sure that petrol stations dont make that much per L sold.

[Machpoint005]

Even at £1-plus a litre, we don't use so much fuel in the boat that it's a problem. As 'weekend' boaters the ownership costs (moorings, licensing and maintenance, principally) are an order of magnitude greater than fuel costs. Yes, it stings when you top up the tank, but it's still not a lot compared with three or four grand a year.

 

I appreciate that if you're using diesel for heating through the winter, the balance is somewhat different, but just think how much it costs to heat a house...

 

>>So if they pay the same for the fuel as you & me they make 14p per L. I am sure that petrol stations dont make that much per L sold.<<

No, but the economics are completely different. A marina is making a premium service available where it is wanted, and is entitled to make a profit on it. A petrol station makes almost nothing on fuel sales (look how many have disappeared over the last ten to 20 years) but sells all sorts of other stuff at top prices in order to have a viable business.

 

Face up to it - nobody is in it for charitable purposes.

 

Boat heating systems are designed to exploit cheap 'red' diesel. This is now no longer available, so the premise no longer applies. It now makes far more sense to convert to other forms of heating, or use a second fuel tank for non-propulsion purposes.

[Keeping Up]

Even at £1-plus a litre, we don't use so much fuel in the boat that it's a problem. As 'weekend' boaters the ownership costs (moorings, licensing and maintenance, principally) are an order of magnitude greater than fuel costs. Yes, it stings when you top up the tank, but it's still not a lot compared with three or four grand a year.

 

I appreciate that if you're using diesel for heating through the winter, the balance is somewhat different, but just think how much it costs to heat a house...

 

 

We don't have diesel heating. As summertime boaters, during the winter we pay to heat the house but in the summer we travel a lot on the boat and use at least 1200 litres of diesel. Yes the price of diesel stings; it is considerably more than the sum of our mooring and licence costs.

[Naughty Cal]

We don't have diesel heating. As summertime boaters, during the winter we pay to heat the house but in the summer we travel a lot on the boat and use at least 1200 litres of diesel. Yes the price of diesel stings; it is considerably more than the sum of our mooring and licence costs.

 

Last years we bought 950 litres of diesel at a cost of just under £700. With that diesel we travelled just under 1400 miles using the boat every weekend during both winter and summer and also and for our four main holidays during the year. Our main source of heat is the diesel heating. In the scheme of things the diesel cost is really pennies when compared to the money we have spent on moorings and maintenance.

 

Unless you were buying your diesel at really very high prices, your mooring and licence must be dirt cheap.

[Alan de Enfield]

.......Oh & the VAT on 99p is 16.5p not 20p.......

 

Of course it is the formula should be 99 - (99/120 X 100)

I'd just taken it straight off the top hadn't I - Stupid, Stupid, Stupid.

[Keeping Up]

Last years we bought 950 litres of diesel at a cost of just under £700. With that diesel we travelled just under 1400 miles using the boat every weekend during both winter and summer and also and for our four main holidays during the year. Our main source of heat is the diesel heating. In the scheme of things the diesel cost is really pennies when compared to the money we have spent on moorings and maintenance.

 

Unless you were buying your diesel at really very high prices, your mooring and licence must be dirt cheap.

 

Our licence - for a 67ft boat - certainly isn't cheap, but luckily as we bought the land some years ago our mooring cost (payable as EOG to BW) is relatively cheap.