Fuel duty

What is it, how it works and the reliefs and rebates available

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Fuel duty is one of the many charges facing businesses. Although the legislation surrounding it is not simple to decipher and apply, the good news is that there are a number of reliefs and rebates your business could benefit from.

What is fuel duty and how does it work?

Fuel duty is a tax levied on road fuel, heating oils, biofuels and low carbon fuel imported into, or produced in the UK.

Fuel duty mainly impacts importers and producers of fuels including:

  • Refineries
  • Biofuel producers
  • Substitute fuel producers

There are 16 different fuel duty rates depending on what the fuel is and what it is used for, ranging from 7.2p per litre to 62.67p per litre.

Any fuel intended to be used as a road fuel, or used outside of machinery in the sectors below, must be taxed at the main fuel duty rate (currently 52.95p per litre).  This duty is paid by the owner of the fuel once it leaves the refinery, production site, or import terminal.

Fuel duty reliefs and rebates

Fuel and oil used in a number of industrial processes, electricity generation, and certain types of ‘excepted machines’ used for ‘qualifying purposes’, qualify for reliefs or rebates.  Specifically:

  • Oil used in industrial processes but not used in an engine, motor, machinery or heating fuel
  • Fuel used to generate electricity in a power station, including combined heat and power stations
  • Aviation turbine fuel, not including private pleasure flying use
  • Diesel and petrol used for sea voyages
  • Diesel used by horticultural producers
  • Fuel loaded onto a ship or aircraft for use as stores on a foreign voyage or flight

Rebated oils, such as red diesel and kerosene, used by specified machines in:

  • Agriculture
  • Golf courses and amateur sports clubs
  • Heating and electricity generation in non-commercial premises
  • Marine craft on inland waterways

Fuel duty guidance

Although fuel duty is a longstanding UK tax (it was first levied in 1908) the legislation is complex and it is easy to make a mistake.

To make sure you are paying the right amount of tax and at the right time, it is vital to have expert help.  This is where our team of specialists come in.

We can help you with:

  • Assessing whether or not you are using the right fuel and paying the right amount of tax
  • Understanding your fuel duty obligations
  • Identifying any reliefs or rebates that may be available to you
  • Dealing with any disputes arising either with HMRC or counterparties, such as when using shared assets
  • Applying for any required authorisations and approvals

Talk to Evelyn Partners

If you have any queries about fuel duty, we can help.  Our team of experts have the technical knowledge and expertise to help you with all aspects of fuel duty.

We can help, particularly if you:

  • Think you may qualify for a rebate or relief you have not claimed for
  • Think you are using the wrong fuel, or
  • Have an HMRC enquiry or assessment

Get in touch

If you have any queries about fuel duty, call one of our experts now.