Do I have to pay fuel duty on vegetable oil?

Historically in the U.K, H.M. Revenue and Customs (HMRC) levied a fuel duty of 30.35 pence per litre for all vegetable oils that met the fiscal definition of what's confusingly termed ‘biodiesel’. This represented a discount of 20 pence on the normal duty level for conventional mineral diesel.

However, it cost HMRC more to police, collect and process payments from private users/producers than the revenue generated. From 1 July 2007, users/producers of 2,500 litres or less per annum were no longer required to submit a monthly return (although existing producers will be required to keep basic records for an additional 6 years). This means the use of compliant vegetable oils are now DUTY FREE for the private motorist.

We regularly receive a lot requests for clarification over this. If you’re particularly concerned over your position, we suggest the following course of action; in short, as with all government departments, the more proof and evidence you can provide, the stronger your position. Hang on to all receipts for veg oil and diesel fuel purchased and note your vehicle mileage at time of conversion. (Having your vehicle professionally converted will allow you to prove when your vehicle was converted). In the extremely unlike event that you're called upon to prove your usage is below 2,500 litre per annum, a check against vehicle mileage, average fuel consumption figures for your vehicle and the date of conversion will be enough to assure HMRC that you fit the profile of an 'average' private motorist - and not running a delivery van service.

In reality, if HMRC suspect all is not above board they will likely adopt the procedure for abuse of rebated ‘red’ diesel. HMRC will assume that every mile since conversion has been covered on veg oil. Your total mileage covered to date will be considered against Department for Transport official mpg figures for your vehicle. This will yield the veg oil consumed. If it averages over 2,500 litres per annum, then stand by for the pleasure of paying the Treasury what you owe in outstanding duty, plus a ‘little something’ extra for their trouble.

Find out more directly from HMRC’s web site at:
http://www.hmrc.gov.uk/briefs/excise-duty/brief4307.htm

For the record, smartveg hasn't heard of a single case of a private motorist being stopped, let alone prosecuted for the use of SVO since the 2,500 limit came in. Just think – when we’re you last stopped for a ‘red’ diesel inspection?

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