What is Red Diesel?
Not all diesel fuels have the same destination. Home heating oil, for example, is designated to be pumped into above-ground storage tanks and used as a source of heat. The diesel fuel in a home heating unit is atomized and then ignited to provide warmth. Diesel fuel for automobiles contains more sulfur than home heating oil, and is designed strictly for use in diesel engines. Automotive diesel fuel is also subject to taxes not levied on home heating oil. In order to tell the two fuels apart, a special red dye is added to home heating oil to create red diesel. Red diesel fuel is only slightly different chemically from regular automotive diesel fuel, but there can be a significant difference in cost. The cheaper red diesel fuel could conceivably work in place of the more expensive automotive diesel fuel, but that would defeat the purpose of a fuel tax. In order to ensure that home heating oil, which is minimally taxed, is not used as diesel fuel, which can be heavily taxed, revenue agent
Up until now, UK leisure boaters have been able to fuel their boats with red diesel which is subject to lower VAT. Coloured with red dye to distinguish it from the more expensive variety, red diesel is typically available for around 40p per litre, less than half the national average for diesel on the forecourt. The issue. In recent years, permission to use red diesel became subject not only to national approval, but also the EU’s. The reason is down to EU policies that bring into line taxes on fuels and energy, and the fact that consent to use red diesel depends on exemption (derogation) from these EU rules. The Royal Yachting Association (RYA) fought to extend the derogation that allowed UK leisure boaters to use lower duty red diesel. In October 2006, the British Government decided to support the case. However, EU officials failed to accept the government’s arguments and have decided that the derogation should end with effect from the end of December 2006. There is now a grace period
Traditionally, Leisure boaters in the UK have had permission to use red diesel, which is taxed at a lower rate. Coloured with red dye to distinguish it from the more expensive variety, red diesel is typically available for around 40p per litre, less than half the national average for diesel on the forecourt. The issue. In recent years, permission to use red diesel became subject not only to national approval, but also the EU’s. The reason is down to EU policies that bring into line taxes on fuels and energy, and the fact that consent to use red diesel depends on exemption (derogation) from these EU rules. The Royal Yachting Association (RYA) fought to extend the derogation that allowed UK leisure boaters to use lower duty red diesel. In October 2006, the British Government decided to support the case. However, EU officials failed to accept the government’s arguments and have decided that the derogation should end with effect from the end of December 2006. There is now a grace period in
Traditionally, Leisure boaters in the UK have had permission to use red diesel, which is taxed at a lower rate. Coloured with red dye to distinguish it from the more expensive variety, red diesel is typically available for around 40p per litre, less than half the national average for diesel on the forecourt. The issue. In recent years, permission to use red diesel became subject not only to national approval, but also the EU’s. This is because the EU has regulations to ensure a harmonisation of tax rates on fuels and energy products, and permission to use red diesel rests on an exemption (or ‘derogation’) from the EU regulations. The Royal Yachting Association (RYA) fought to extend the derogation that allowed UK leisure boaters to use lower duty red diesel. After much lobbying, the British government agreed in October 2006 to support their case. However, EU officials failed to accept the government’s arguments and have decided that the derogation should end with effect from the end of
Up until now, UK leisure boaters have been able to fuel their boats with red diesel which is subject to lower VAT. Coloured with red dye to distinguish it from the more expensive variety, red diesel is typically available for around 40p per litre, less than half the national average for diesel on the forecourt. The issue. In recent years, permission to use red diesel became subject not only to national approval, but also the EU’s. The reason is down to EU policies that bring into line taxes on fuels and energy, and the fact that consent to use red diesel depends on exemption (derogation) from these EU rules. The Royal Yachting Association (RYA) fought to extend the derogation that allowed UK leisure boaters to use lower duty red diesel. In October 2006, the British Government decided to support the case. EU officials, however, did not accept the argument and decided the exemption must finish at the end of 2006. There is now a grace period in force for the phasing out of red diesel in t
