Guidance

Fuel used in private pleasure craft and for private pleasure flying (Excise Notice 554)

Find out how to charge and collect excise duty on fuel used in private pleasure craft and fuel used for private pleasure flying.

1. Introduction

1.1 About this notice

This notice gives information and guidance on procedures to be followed for the charging and collection of excise duty on fuel used:

  • in private pleasure craft
  • for private pleasure flying

1.2 Who should read this notice

This notice is intended for:

  • registered dealers in controlled oil who supply red diesel or bioblend for use in private pleasure craft in Great Britain (England, Scotland and Wales)
  • registered dealers in controlled oil who supply aviation turbine fuel (Avtur) for private pleasure flying
  • suppliers of diesel to private pleasure craft in Northern Ireland
  • users and purchasers of fuel for private pleasure craft
  • users and purchasers of Avtur for private pleasure flying

1.3 The law covering this notice

The primary law can be found in the Hydrocarbon Oils Duties Act 1979 as amended by the Finance Act 2008 and 2012.

This Act also provides for the following secondary legislation – The Hydrocarbon Oil and Bioblend (Private Pleasure-flying and Private Pleasure Craft) (Payment of Rebate etc) Regulations 2008 (SI 2008 No 2599), The Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 (SI 2002 No 3057). The Hydrocarbon Oil and Biofuels (Northern Ireland Private Pleasure Craft) Regulations 2021 (SI 2021 No780).

Nothing in this notice changes the law.

1.4 Other relevant notices

Excise Notice 192 Registered dealers in controlled oils
Excise Notice 179 Motor and heating fuels general information and accounting for excise duty and VAT
Excise Notice 179a Aviation turbine fuel (Avtur)
Excise Notice 263 Marine voyages – relief from fuel duty
Excise Notice 172 Excise duty drawback – ships and aircraft stores

2. Private pleasure craft

2.1 Duty treatment of fuel used in private pleasure craft

Diesel used for propelling private pleasure craft can no longer benefit from a reduced rate of duty. It’s subject to duty at the full rate.

In Great Britain, a private pleasure craft may continue to use rebated (red) diesel, including rebated sulphur-free diesel and rebated bioblend (a mix of diesel and biodiesel) however, an amount equal to the rebate must be paid on the fuel used for propelling the boat.

In Northern Ireland:

  • all private pleasure crafts must use diesel, biodiesel, or bioblend on which duty has been paid at the full (unrebated) rate in the motor used for propulsion
  • if your private pleasure craft has a single fuel tank for propulsion and other uses on board, you may benefit from relief on a proportion of fuel, to allow for non-propulsion use – you should check with your supplier before ordering but, if the supplier has registered with us to claim the non-propulsion relief, they can allow a discount equal to the rebate on 40% of the fuel supplied
  • if your private pleasure craft has 2 fuel tanks (one supplying the engine for propulsion, and one for heat, light, and other appliances) you must use fully duty paid diesel in the propulsion tank – you can use red diesel in the other tank but you do not qualify for the non-propulsion relief as it’s already allowed on the ‘red’ diesel
  • a residential craft, with a single tank supplying an engine which does not propel the vessel may continue to use rebated (red) diesel

There’s no change to the duty treatment of petrol in private pleasure craft because this is already subject to the full rate of duty.

A commercial craft can use rebated diesel without the need for a written declaration.

A qualifying marine craft can continue to claim a full refund of duty under Marine Voyages Relief.

2.2 Outline of the schemes

In Great Britain it is illegal to use rebated diesel, biodiesel, or bioblend for propelling a private pleasure craft, unless the purchaser of the fuel declares their intent and pays the full rate of duty on it.

Registered dealers in controlled oil, who supply rebated (red) diesel to private pleasure craft in Great Britain, are responsible for charging the full rate of duty on fuel declared for propulsion. They must then pay the duty collected to HMRC and keep the declarations made by their customers.

In Northern Ireland, a vessel with only one tank must use full duty-paid diesel. If the supplier has registered with HMRC, they can allow a discount, equal to the rebate, on 40% of the fuel supplied, to allow for non-propulsion use. They can then claim back this amount from HMRC.

Find out about rates of excise duty.

2.3 Use of fuel by private pleasure craft in Northern Ireland

From 1 October 2021, private pleasure craft in Northern Ireland, with one fuel tank (for both propulsion and non-propulsion), cannot use red diesel unless it was put into the fuel tank either in:

  • Northern Ireland before 1 October 2021
  • a jurisdiction where using red diesel for propulsion of private pleasure craft is legal, such as Great Britain, the Channel Islands and the Isle of Man

For example, you can refuel your private pleasure craft with red diesel in Great Britain after 1 October 2021, make a declaration of the proportion that will be used for propulsion and pay duty on that amount, then travel to Northern Ireland with the red diesel already in your fuel tank.

If you travel to Northern Ireland having refuelled with red diesel elsewhere, you’re advised to keep documents (such as receipts, logbooks and declarations) to show HMRC where and when you refuelled.

If your private pleasure craft in Northern Ireland (including houseboats) has separate tanks for propulsion and non-propulsion uses, you may continue to use red diesel in your non-propulsion fuel tank after 1 October 2021 but your supplier cannot allow any discount on the ‘white’ diesel, because it is all being used for propulsion.

If you’re a fuel supplier in Northern Ireland and supply white diesel for private pleasure craft with one fuel tank, you can register for a new HMRC relief. The relief will allow you to deduct (at the point of sale) an amount equal to the duty rebate on 40% of the total volume of white diesel supplied to single tank private pleasure craft. The duty rebate is the difference between the duty rate for white diesel and the lower, rebated rate for red diesel. When you’ve worked out the duty reduction, and allowed it to the customer, you can reclaim it from HMRC (see section 7).

3. Suppliers of diesel for use in private pleasure craft in Great Britain

3.1 Registration

As rebated diesel is a controlled oil, all suppliers must be a registered dealer in controlled oil. Not all registered dealers supply fuel for use by private pleasure craft, but if you do (or will), you must tell HMRC. Registered dealers who supply rebated diesel, biodiesel or bioblend to private pleasure craft must be registered with HMRC in order to charge and collect the duty, and to receive a payment return.

If you’re registering as a new dealer, you’ll be asked to declare on the registration form if you supply rebated fuels to private pleasure craft.

If you start supplying to private pleasure craft after you’ve registered, you must notify us in writing.

HMRC will send you a new registered dealer in controlled oil registration certificate, showing that you’re a supplier of fuel to private pleasure craft. You’ll also receive a payment return towards the end of the accounting period (see paragraph 5.1).

3.2 When to charge duty on fuel supplied in Great Britain

In many cases it may be clear if the supply you’re making is for commercial purposes or for private pleasure use, for example, when supplying regular customers.

Supplies for commercial use

There’s no change to procedures for supplying fuel for commercial use.

You’re not required to ask customers to produce documentary evidence to prove their status as a commercial or private user.

Supplies to a pleasure craft in Great Britain

You’re not responsible for ascertaining if the fuel you sell to an individual is for the propulsion of a private pleasure craft. It’s the purchaser’s responsibility to confirm this and to make a declaration.

3.3 Why a declaration needs to be made

The law requires that a declaration is made by the person purchasing rebated fuel in Great Britain if it’s to be used for propelling a private pleasure craft. At the time of supply the purchaser must declare in writing the proportion of fuel that is to be used for propulsion.

3.4 What the declaration is

The declaration should be in the following format:

‘I declare that ( )% of the fuel purchased will be used for propelling a private pleasure craft.

I am aware that the Hydrocarbon Oil Duties Act 1979, which permits the use of marked diesel to propel private pleasure craft, only applies within UK waters. I acknowledge that nothing in that Act, or the making of this declaration, affects any restrictions or prohibitions that may apply to the use of fuel for propelling private pleasure craft outside UK waters, including any restrictions or prohibitions under the law of another country that apply to the waters of that country.’.

It must be signed and dated by the purchaser. You must also make sure that the name and address of the purchaser is noted in your records.

There’s no standard form, but you must retain the declaration with your normal business records. It’s up to you to incorporate the declaration into your records in the most appropriate way. It may, for example, be printed onto invoices or receipts, or it may be that the required information is noted on a separate piece of paper.

If you make regular supplies to the same customer then you do not need to obtain a declaration every time you make a supply. You must make sure that there’s a clear audit trail in your records between this declaration and each purchase made by the declarant. A single declaration can be considered valid for up to 12 months. However, this presumes that the percentage of fuel used for propulsion remains constant during that period. The declarant will have to make a new declaration if they think that the percentage of fuel used for propulsion has changed (see paragraph 4.2).

3.5 Declarations for when the supply is at an unmanned pump, where payment is by credit or debit card

If you supply fuel at unmanned pumps and the purchase is made electronically by debit or credit card, you must also make provision for customers to make a declaration, either electronically, as part of the automated process of buying their fuel, or by some separate means. You must also make sure that their name and address is provided and is retained in your records.

With regard to the latter, for example, many suppliers who operate unmanned pumps hold account customer information centrally. In these circumstances, the user may make a single declaration, as per the arrangements for regular customers (see paragraph 3.4). There must be a clear audit trail between the centrally held declaration and fuel transactions made by the account holder or customer.

3.6 If you think the boat is a pleasure craft but the purchaser will not sign a declaration

If a customer insists that they’re a commercial user you may supply them at the fully rebated rate and they’re not required to complete a written declaration. However, any doubts you may have as to their commercial status should be noted in your records.

If a customer fails to make a declaration at the time of supply, you should remind them of the obligation to make one in respect of private pleasure craft. They can then make an informed decision as to if a declaration is required and advise you of that.

If a customer refuses to make a declaration (even a verbal statement that their use is commercial), we would expect you to exercise your registered dealer in controlled oil duty of care and refuse to supply the fuel until they indicate their status as a commercial or private user.

If they say they’re a commercial user, supply them at the fully rebated rate. If they insist their use is for private pleasure but are unwilling to make a written declaration you should refuse to supply the fuel unless they do so. You are not responsible if a purchaser makes a false declaration.

See paragraph 3.8 if the customer claims that all of the fuel is for non-propulsion purposes.

3.7 Check how much fuel is being used for propulsion use

It’s the purchaser’s (not the supplier’s) responsibility to declare the proportion of fuel used for propelling the craft. It’s your responsibility to charge the correct amount of duty and VAT on the supply, see section 6.

The method of apportionment introduced under this scheme may only be applied to supplies of marked gas oil, not to supplies of other fuels, such as white diesel or petrol.

3.8 If a private user claims 100% is used for non-propulsion purposes

In recognition of their status, residential boat owners, whose primary, or often their only, place of residence is their boat, are allowed to purchase all of their fuel at the rebated rate. If a private user claims such status and claims that 100% of their fuel is for purposes other than propulsion, then you may supply the fuel without charging any additional duty and without a declaration, but you should note your records accordingly.

If you have any reason to doubt the validity of the status being claimed then you should note your records to that effect.

3.9 Records you must keep

In addition to your normal records required as a registered dealer in controlled oil, you must retain the declarations made by private users.

You must also keep a record of the amount of duty that you’ve charged and collected and there must be a clear audit trail between the declaration, the duty collected and the duty paid.

These records must be retained for the statutory 6 years from the date of the transaction.

3.10 Calculate the duty due

Duty on marked gas oil is partially rebated. The amount to be charged (the relevant rebate in the formula) is equal to the difference between the full duty rate and the rebated rate which has already been paid. In order to charge the correct rate of duty you must do the following calculation:

Quantity in litres × rate of the relevant rebate at the time of supply.

VAT is to be charged in addition at the appropriate rate.

Guidance can be found in Fuel and power (VAT Notice 701/19).

The proportion split between propulsion and non-propulsion usage will vary, but the following example assumes a 60% (propulsion) and 40% (non-propulsion) split for a purchase of 100 litres of red diesel.

For the purpose of the example the price of marked gas oil, before additional duty, is a notional 70 pence per litre (ppl), on which duty has already been paid at the rebated rate of 11.14ppl.

No further duty is due on the 40% for purposes other than propulsion, but on the 60% for propulsion the duty due is the difference between the rebated rate of 11.14ppl and the full rate of 57.95ppl, that is 46.81ppl. VAT at the reduced rate is due on the full price:

Propulsion calculation (that is, 60%)

60 litres @ 0.70ppl = £42.00
60 litres @ 46.81ppl = £28.08 (additional duty payable to HMRC)
VAT @ 5% = £3.50
Propulsion total = £73.58

Non-propulsion calculation (that is, 40%)

40 litres @ 0.70ppl = £28.00
VAT @ 5% = £1.40
Non-propulsion total = £29.40
Transaction total = £102.98

Duty rates can change from time to time, in particular following announcements in the Budget and Autumn Statement, and registered dealers in controlled oil should note their responsibility to identify and apply any changes from their effective date. That means that the new rates of duty must be accounted for and charged to your customers even if you’re supplying fuel which you bought in before the rates changed.

Information on excise duty and VAT rates is available from the GOV.UK website or from the Excise helpline.

3.11 If you sell your business, cease to trade or stop supplying marked gas oil to private pleasure craft

You must notify the Mineral Oil Reliefs Centre in writing of any changes no longer than 30 days after the date of the change.

For further information see Registered dealers in controlled oil (Excise Notice 192).

4. Suppliers of diesel for use in private pleasure craft in Northern Ireland

4.1 Registration to claim non-propulsion relief

Fuel suppliers in Northern Ireland who supply full duty-paid diesel to private pleasure crafts with only one tank will be able to allow a discount, equal to the rebated rate, on 40% of the fuel they supply. They will be able to claim back the discount (see section 7) but they must register with HMRC to claim the relief.

To register you should print off and complete the form at paragraph 20.3 and send it to the address shown on the form.

Once we have processed your application, we will confirm in writing that you have been registered to claim the relief.

4.2 When you can claim relief

Provided you have been registered by us you can claim the non-propulsion relief on fuel supplied to eligible craft in Northern Ireland. To do this you must allow a discount equal to the difference between the full duty rate and the rebated duty rate on 40% of the fuel supplied to private pleasure craft.

The current rates are available and are described as ‘Heavy oil (diesel)’ and ‘Marked gas oil’.

You may not claim the relief on rebated fuel supplied to commercial craft or on fuel supplied to private pleasure craft with more than one fuel tank. In many cases it may be clear if the supply you’re making is for commercial purposes or for private pleasure use, for example, when supplying regular customers.

4.3 Declaration by the user

At the time of supply you must obtain from the purchaser a signed and dated written declaration. An example declaration (that you may print off and use) is in paragraph 20.2.

You must retain the declaration with your normal business records. It’s up to you to incorporate the declaration into your records in the most appropriate way. It may, for example, be printed onto invoices or receipts, or it may be that the required information is noted on a separate piece of paper.

4.4 Records you must keep

In addition to your normal records you must retain records to evidence the fuel supplied, when, where, and to whom it was supplied. You must keep a record of the amount of discount you allowed, how it was calculated, and the amount of duty reclaimed. There must be a clear audit trail between the supply, the discount allowed, and the amount reclaimed from HMRC.

You must retain these records for 6 years from the date of the supply.

5. Purchasers of rebated (red) diesel, rebated biodiesel, and rebated bioblend for use in private pleasure craft in Great Britain

5.1 The declaration and how to make it

The use of red diesel with full duty paid for propelling private pleasure craft is permitted under UK national legislation within UK waters. When red diesel is used outside UK waters it will be subject to any prohibitions and restrictions that apply in the waters of the country it’s used in.

When you purchase rebated fuel you must declare the amount that will be used to propel your boat in order for the supplier to calculate and charge you the appropriate duty. This is because only the fuel used for propelling the craft is subject to the full duty rate. A declaration is required even if all of the fuel is going to be used for propulsion purposes. The declaration is to be in the following format:

‘I declare that ( )% of the fuel purchased will be used for propelling a private pleasure craft. I am aware that the Hydrocarbon Oil Duties Act 1979, which permits the use of marked diesel to propel private pleasure craft, only applies within UK waters. I acknowledge that nothing in that Act, or the making of this declaration, affects any restrictions or prohibitions that may apply to the use of fuel for propelling private pleasure craft outside UK waters, including any restrictions or prohibitions under the law of another country that apply within the waters of that country.’.

You must sign and date the declaration and also provide your name and address to the supplier.

If you use rebated diesel in your boat without making a declaration you will be liable to a civil penalty under section 9 of the Finance Act 1994 (civil penalties).

5.2 How often you need to make a declaration when you buy rebated fuel in Great Britain

If you’re a regular customer to a supplier you may make a single declaration covering all of your purchases with that supplier for up to a year, provided the percentage declared is an accurate reflection of your intended use for propulsion over the period concerned. You’ll have to renew your declaration at least once a year.

You’ll also have to make a new declaration if the percentage use changes, for example, the percentage for non-propulsion use may increase during the winter months.

5.3 Work out the proportion of fuel used for propulsion

We recognise that the declaration made by you will be an estimate, but you must make every effort to make sure it’s an accurate reflection of your usage.

Analysis by both the industry and HMRC suggests that a split of 60% for propulsion and 40% for other use probably reflects most people’s fuel use and it’s therefore likely that many users will declare such an apportionment. This will make it easier for suppliers (registered dealers in controlled oil) to work out the additional duty and VAT.

However, where you know that your propulsion use may be more or less apportioned 60% for propulsion and 40% for other use, or a craft clearly has no non-propulsion fuel use, then you must declare your actual intended usage.

The method of apportionment introduced under this scheme may only be applied to supplies of rebated (red) diesel, biodiesel or bioblend.

5.4 If you operate a boat club or hire, lease or lend boats to third parties in Great Britain

Boat clubs and hire companies, such as those who offer boating holidays, may ‘self-declare’ on behalf of the person hiring or using the boat, if they cannot reasonably be expected to estimate the proportion of fuel which may be used for propulsion during the period of hire.

We accept that the club, company or owner of the vessel may be better placed to know this and make an accurate declaration on their behalf.

The owner may simplify the system of declarations for each boat and period of hire, in the same manner as described at paragraph 4.2, provided there’s a clear audit trail between the hire contract and the fuel provided to the customer during the period of hire.

The owner may account for the duty due on behalf of the customer or club member, or charge them duty at each fuel supply transaction, depending on the circumstances of the hire, for example, many holiday vessels are hired for a one-off payment which includes the cost of fuel to be used during the hire period, so duty should be factored into that price.

5.5 Keeping a copy of the declaration

You’re not required to obtain or retain evidence that you’ve made a declaration and paid duty on fuel you purchased for propulsion, but doing so will facilitate any checks HMRC, the relevant authorities in the UK or another country carry out, to make sure that the fuel has had duty paid at the appropriate rate.

5.6 If you have 2 separate tanks, one for propulsion and one for other purposes

Provided that the tank for non-propulsion use is not connected to the engine and in no way can be used to propel the craft, you can claim all fuel delivered into that tank as non-propulsion and the rebated rate will apply. If it may be used for propelling the craft, then you must adhere to the new arrangements and declare actual usage for propulsion.

If you subsequently take fuel from a separate tank to propel the craft you may be subject to a civil penalty.

5.7 If you’re a residential boat owner and only move your boat short distances occasionally

We recognise that there are boat owners whose primary, or only residence is their boat.

Some of these will be at fixed moorings or move just a very short distance along the tow path from permanent moorings. If you live aboard your craft permanently and hold certain documentation, such as a Houseboat Licence, Residential Mooring Licence, Council Tax bill in respect of the mooring, or other documentation, such as invoices or bills which provide proof of permanent residency, you may purchase all your fuel at the rebated rate (as if you owned a commercial vessel). You are not required to make a declaration.

However, it will be your responsibility to make sure that you hold the requisite documentation should we wish to check this at a future date.

5.8 If you’re a continuous cruiser

If you’re a ‘continuous cruiser’ you may not claim all of your fuel for non-propulsion purposes under the arrangements for residential boat owners. Even if you reside permanently on your craft, you must declare your actual intended usage for propulsion.

5.9 If you’re a boat builder or dealer

Many boat builders or dealers are not registered dealers in controlled oil, but have their vessels filled by a third-party supplier who is a registered dealer, prior to delivery to the customer.

This one-off supply is treated as part of taking title to the vessel, rather than a separate supply of fuel. Therefore, builders and dealers who operate on this basis do not need to register as a dealer in controlled oil or ask their customer for a declaration and additional duty.

The third party fuel supplier (registered dealer in controlled oil) does not need to account for additional duty and may continue to supply red diesel for these purposes at the fully rebated rate of duty.

This applies to new build and resale boats sold with a full tank of red diesel to private customers.

5.10 If you make an incorrect declaration

If you purposely make a declaration which you know to be incorrect you may be subject to a civil penalty, (see section 6).

However, it’s accepted that declarations will necessarily be based upon an estimate of intended usage and that this may not in every instance reflect actual usage. Provided you’ve made every effort to accurately estimate your intended usage, we will not apply a civil penalty.

6. Returns and payments for supplies in Great Britain

6.1 Returns and due dates

As a registered supplier of fuel to private pleasure craft you’ll be required to submit a payment return form HO107, as well as your usual registered dealer in controlled oil returns.

The payment return will show your registered dealer in controlled oil registration number and you’ll be asked to declare the total amount of duty due, which you’ll have collected. Sign and date the form and return it to the following address:

HMRC Cumbernauld
Cumbernauld Accounting Team
St Mungo’s Road
Cumbernauld
G70 6AD

When you register as a dealer in controlled oil, you’ll be asked to indicate on the registration form if you wish to submit payment returns annually or quarterly, and the month of the year end or the first quarter end. This will allow you to choose a period that suits you, for example, to coincide with your normal registered dealer in controlled oil accounting period or financial year end.

If you sell your business or cease to trade you’ll receive a final payment return for the period up until you cease trading.

You’ll have 21 days following the end of the accounting period to send the return to HMRC and to pay the duty. The return will show your registered dealer in controlled oil registration details and a box for completion showing the total amount of duty collected in the period. You must also sign and date the return. You must complete and return the form even if you’ve made no supplies in the accounting period and you have no duty to pay.

6.2 Stagger change

If you wish to change your payment period you should address your request to the Mineral Oil Reliefs Centre.

6.3 Payment methods

Payment by Direct Debit is not available. You may pay either by credit transfer or by cheque. Indicate which method of payment you’re using by ticking the appropriate box of the payment return.

Credit transfer by Bacs or CHAPS

Our preferred method of payment is electronically, using one of the following options:

  • Bacs Direct Credit
  • Faster payments
  • CHAPS
  • internet or telephone banking

Use the following bank details to make payment:

  • sort code — 08 32 00
  • account number — 12000903
  • account name — HMRC Miscellaneous Account

When making payment, quote your registered dealer in controlled oil registration number. This will help us identify your payment on our bank statement.

You must still submit your payment return (H0107) to the Cumbernauld Accounting Team.

You must arrange to transfer the necessary funds by the 21st day immediately following the end of the accounting period to which the return relates. When this falls on a weekend or bank holiday you must arrange for payment and submit the return by the last working day prior to this.

The payment option you use will affect how long the payment takes to reach HMRC:

  • CHAPS payments normally reach HMRC on the same working day
  • Bacs payments normally take 3 working days
  • Faster Payments (online or telephone banking) normally reach HMRC within 24 hours, including weekends and bank holidays

Cheques

Cheques should be crossed and made payable to ‘HM Revenue and Customs’ and sent in with your payment return to reach us by the due date, that is the 21st day following the end of the accounting period. When this falls on a weekend or bank holiday the cheque must be received by the last working day prior to this. Write your registered dealer in controlled oil registration number on the back of the cheque.

The return and payment should be sent to the Cumbernauld Accounting Team.

7. Claims and repayments for supplies in Northern Ireland

7.1 How to claim back discount

To claim back the non-propulsion relief on a supply of full duty-paid (white) diesel to a private pleasure craft in Northern Ireland with only one tank, you must be registered with HMRC as a supplier (see section 4).

When you have made a supply of white diesel to a private pleasure craft and allowed the discount on the 40% for non-propulsion you should print the form at paragraph 20.1, complete it and send it to the address shown on the form.

7.2 When to claim

You can submit a claim for a ‘claim period’ which cannot be less than 1 month or more than a year. Your claim for the claim period must be submitted within 12 months of the end of the claim period. For example, if you use a 3-month claim period from 1 March to 31 May, you must submit your claim by 31 May the following year.

7.3 Conditions for the claim

The claim must:

  • be submitted by the claimant (supplier) in writing, signed and dated
  • be in the form specified in paragraph 20.1
  • include the following details, the:
    • period covered by the claim
    • number of supplies made to private pleasure craft in that period
    • total volume of fuel delivered to qualified users
    • amount being reclaimed

The supplier must retain records for each supply against which a discount was allowed and subsequent claim to repayment made. Those records should include:

  • the declaration by the purchaser (see paragraph 4.3)
  • details of the date, quantity supplied, and discount allowed
  • the name and address of the recipient, and the name of the vessel

8. Penalties

Situations where a civil penalty under section 9 of the Finance Act 1994 may be imposed include failure by:

  • users to make:
    • a declaration that the marked gas oil is intended to be used as fuel for propelling private pleasure craft
    • complete and accurate declarations
  • suppliers to:
    • render returns and payments by the due date
    • make complete and accurate returns
    • make complete and accurate repayment claims
    • keep accurate records

Penalties of £250 or 5% of the duty due (whichever is greater) and where appropriate daily penalties of £20 after the due date that payment of duty remains outstanding may be imposed for each contravention.

9. Assessments

HMRC can assess the amount of duty due where a:

  • supplier in Great Britain fails to pay the duty to HMRC – a civil penalty may also be issued (see section 6)
  • relief claim made by a supplier in Northern Ireland is cancelled, either in part or in full

10. Reviews and appeals

All the sanctions are subject to the appeal provisions contained in the Finance Act 1994. If we impose any of these sanctions, we will notify you at the same time about the review procedure and your rights of appeal, which you may make to an independent tax tribunal.

11. Definition of private pleasure craft

‘Any craft used by its owner or the natural or legal person who enjoys its use either through hire or through any other means, for other than commercial purposes and in particular other than for the carriage of passengers or goods or for the supply of services for consideration or for the purposes of public authorities.’ The definition of ‘private pleasure craft’ is different from the definition of ‘pleasure vessel’ used in UK legislation such as regulations made under the Merchant Shipping Act 1995, including the Merchant Shipping (Vessels in Commercial Use for Sport or Pleasure) Regulations 1998.

The definition of ‘pleasure vessel’ is narrower than that of ‘private pleasure craft’ so it’s likely that some craft that are not ‘pleasure vessels’ for the purposes of the Merchant Shipping (Vessels in Commercial Use for Sport or Pleasure) Regulations 1998 and therefore have to comply with the relevant Code of Practice will nevertheless still be ‘private pleasure craft’ for the purpose of purchasing fuel.

In most cases it will be clear if a craft is being used for private pleasure purposes, for example, privately owned yachts, motor boats or canal boats. Likewise, the bareboat hire or leasing of such boats from a commercial body, for example for holidays, is classed as private pleasure usage.

However, we accept that some arrangements may be difficult to classify, so we have provided the following broad guidance. The following is not a definitive list but are examples of what we consider are likely or unlikely, to be private pleasure use:

  • bareboat charter – likely to be regarded as a private pleasure craft, whatever the means of payment, if any
  • skippered charter – unlikely to be regarded as a private pleasure craft if the owner or charter company provides a skipper, as this may equate to the carriage of passengers for consideration
  • training courses – unlikely to be a private pleasure craft, as this may equate to the supply of services for consideration
  • yacht delivery – unlikely to be a private pleasure craft if the delivery is by professional crew on behalf of a yacht manufacturer, distributor or charter company – otherwise, likely to be a private pleasure craft
  • club yacht used by members – likely to be a private pleasure craft
  • club committee boat – likely to be a private pleasure craft
  • club safety boat – likely to be a private pleasure craft, although a coastal club may be entitled to reclaim the duty in accordance with Notice 263 marine voyages – relief from fuel duty
  • club launch – likely to be a private pleasure craft

For club vessels, many of them fall within the definition of ‘pleasure vessel’ for the purposes of the Merchant Shipping (Vessels in Commercial Use for Sport or Pleasure) Regulations 1998 and do not need to comply with the applicable Codes of Practice. As such, it’s likely that they would also be regarded as ‘private pleasure craft’ for the purposes of purchasing fuel.

Where you have any doubts you should seek a definitive ruling from us. You can do this by writing with full details of the type of vessel and the circumstances of its use to the Excise helpline.

Transportation of staff in corporate yachts – if you transport your staff on corporate yachts to attend a business meeting or trade fair, the fuel duty exemption will no longer be applicable as this is now considered to be private pleasure. A company using its own yachts to transport its own staff is not providing a service for consideration.

12. Private pleasure flying

12.1 Duty treatment of fuel used in private pleasure aircraft

Two main fuels are used in aviation:

  • Avtur which is used in a commercial jet and turbo-prop aircraft
  • aviation gasoline (avgas) which is used mainly in small piston-engined aircraft

Helicopters use both Avtur and avgas. Some micro-light aircraft can fly on unleaded petrol.

Fuel purchased for private pleasure flying is subject to duty at the full rate.

Avtur, which is an unmarked type of kerosene, is fully rebated to a nil rate of duty. All avgas is subject to reduced duty rate whether it’s used for commercial or private pleasure use.

12.2 Avtur

Avtur is a type of kerosene subject to the same full rate of duty for heavy oil used in road vehicles. Kerosene supplied for use other than as road fuel contains fiscal markers and qualifies for a full rebate of duty. Avtur also qualifies for a full rebate, but for safety reasons is supplied under a marking waiver.

12.3 Outline of scheme

Users of Avtur for private pleasure flying are required to pay ‘an amount equal to the rebate’, which we shall refer to as ‘duty’, to HMRC. At the time of purchase, the user will be asked to make a declaration if the fuel is to be used for private pleasure flying and acknowledge the obligation to pay the duty. The supplier will retain the declaration. The user will have at least 30 days to pay the duty to HMRC.

13. Suppliers of Avtur

13.1 Obligations when supplying Avtur

Avtur is a controlled oil and all suppliers of Avtur are registered as registered dealers in controlled oil. As a registered dealer, you have a general duty of care to make sure that you only make supplies to customers who have a legitimate use for that oil. That duty of care was extended from 1 November 2008 to include an obligation to draw to the attention of the purchaser the requirement to pay the duty to HMRC, if you think that the Avtur you’re supplying might be used for private pleasure flying.

If the purchaser states that the fuel will be used for private pleasure flying then you’re required to obtain a signed and dated declaration from the purchaser to that effect and retain it with your records for future inspection by HMRC. If the purchaser states that it’s not for private pleasure flying then you must note your records to that effect.

You’re not responsible for paying the duty to HMRC.

13.2 Declarations the supplier must ask the purchaser to make

The wording of the required declaration is:

‘I declare that some or all of the kerosene purchased is to be used for private pleasure flying. I am aware that, on the quantity of kerosene used for private pleasure flying, I have a legal obligation to pay to HMRC an amount equal to the rebate allowable on a like quantity of kerosene at the time of this declaration.’.

It must also show the name and address of the declarant who must sign and date it.

It’s up to you how you incorporate the declaration into your records, for example, it may be included on a sales invoice, but you must make sure that the name and address of the purchaser is also noted in your records and that the purchaser signs and dates the declaration.

The declaration may also be made on plain paper as long as all the required information is noted.

13.3 When suppliers have to ask purchasers how the fuel is going to be used

Some supplies will be clearly for commercial or business purposes and many suppliers will also know their regular customers. It’s only if in doubt, or where the fuel is clearly for pleasure flying, that you need to ask for a declaration.

13.4 Extra records the supplier must keep

You must retain the declarations. You must note your records if you’ve queried the use of the fuel and the purchaser has declined to make a declaration for private pleasure use stating that it’s for business or commercial purposes.

14. Users of Avtur for private pleasure flying

Users of Avtur are responsible for paying the duty to HMRC.

14.1 The declaration and how to make it

When you purchase Avtur you may be asked by the supplier if it’s to be used for private pleasure flying. If that’s the case you’ll be asked to make the following written declaration:

‘I declare that some or all of the kerosene purchased is to be used for private pleasure flying. I am aware that, on the quantity of kerosene used for private pleasure flying, I have a legal obligation to pay to HMRC an amount equal to the rebate allowable on a like quantity of kerosene at the time of this declaration.’.

You’ll be asked to record your name and address and to sign and date the declaration. The supplier will retain the declaration in his records.

Use of Avtur for private pleasure flying without making a declaration, or failing to pay the duty due, will render you liable to a penalty.

14.2 Make a declaration every time you purchase Avtur for private pleasure flying

You must make a declaration each time.

14.3 If someone else purchases the fuel for you

If somebody else purchases fuel for you, for example if you employ a maintenance company to look after your plane including filling it with fuel, there are 2 options. You can either:

(i) provide a declaration to be given to the fuel supplier when the fuel is purchased and you’ll have an obligation to pay the duty
(ii) authorise the maintenance company to complete the declaration and pay the duty on your behalf – you’ll still need to inform them how much of the fuel is to be used for private pleasure purposes in order for them to calculate the duty due.

14.4 Pay the duty due

You can use the payment form HO105 Pay duty on aviation turbine fuel used for private pleasure-flying.

You can also receive a copy of the form by contacting the Excise helpline.

This can be used to accompany payment of the duty on either single or multiple purchases within the same month. If you only make an occasional purchase you may choose to pay the duty on that purchase straightaway. However, if you make several purchases within the same month then you should declare them on one form and pay the total duty due in one transaction.

Use of the form is not obligatory as long as all the information on it is supplied at the time the payment is made. The information may, for example, be provided on plain paper so long as it’s headed ‘Payment of Duty on Avtur used for private pleasure flying’. The information required is:

  • your name and address
  • the quantity of Avtur purchased per transaction
  • date of each purchase
  • name and address of supplier for each purchase
  • rate of rebate or duty for each purchase
  • total duty due

The following declaration must be noted:

‘I declare that the information provided is true and complete’ and it must be signed and dated by the declarant.

Payment may be made by electronic transfer, Bacs or CHAPS. Payment by Direct Debit is not available.

If you want to make your payment electronically, get a unique reference number and the bank account details by contacting HMRC on Telephone: 03000 583 946. Only phone this number to get a unique reference number and the account details. For all other enquiries, contact the Excise helpline.

The form (or required information), is to be sent to the Cumbernauld Accounting Team.

14.5 When to pay

You must pay the duty no later than 30 days after the end of the calendar month in which the declaration was made and the fuel was purchased. If the 30th day is not a normal working day but falls at a weekend or bank holiday then payment must be made no later than the last working day prior to this.

If you make only an occasional purchase you may prefer to pay the duty straightaway rather than wait until the end of the month. However, if you make more than one purchase in a month you should make one payment, and submit one form, covering the total purchases in the calendar month concerned.

14.6 The rates of duty

The rate of duty is that applicable to kerosene used as a motor fuel, so the full heavy oil rate. Rates of duty are subject to change at Budget or other times and it’s your responsibility to make sure that you use the correct rate of duty. Information on current excise duty rates is available from our website or from the Excise helpline.

14.7 If you use your plane or helicopter for business or commercial use and private use

When you purchase the fuel, you must declare at the time of purchase if some or all the fuel is to be used for private pleasure flying.

If fuel is to be used for both purposes, you’ll have to estimate the amount of fuel used for pleasure flying and on which duty must be paid and declare it on the payment form.

14.8 If you buy fuel intending to use it for business purposes, but then use it for private pleasure

Use of Avtur for private pleasure flying without making a declaration, or failing to pay the duty due, will render you liable to a civil penalty. If there’s any likelihood of the fuel being used for private pleasure use, you must make a declaration at the time of purchase. You should keep a note of the change in circumstances should HMRC wish to verify.

14.9 If you use the fuel for flying outside of the UK and would be eligible to claim aircraft stores relief

You’re entitled to claim drawback of excise duty on fuel used if you land abroad.

As a simplification measure, you may offset the duty you’re liable to pay against the duty you intend to reclaim.

To do this you must submit form HO105 or the required information on plain paper in accordance with paragraph 14.4 and declaring the duty due.

At the same time you must attach and submit a completed form HO60 Fuel Duty: claim for drawback of duty paid on oils used as fuel on foreign-going aircraft, or HO65A (aircraft stores relief claim form). Both forms can be obtained from the Excise helpline.

On form HO105 or plain paper you must declare the net amount of duty due and either tick the appropriate box or indicate that a form HO60 or form HO65A is attached.

Form HO60 and Form HO65A are to be sent to the Cumbernauld Accounting Team and not the Mineral Oil Reliefs Centre as noted on the form.

If all of the fuel purchased has been used for flying abroad and you would be entitled to reclaim all of the excise duty it if it were paid, even though no duty is being paid you must still send both forms to HMRC.

If only some of the fuel purchased was used for flying abroad you’ll have to estimate the amount of fuel used and pay excise duty on the amount of fuel used for private pleasure flying within the UK.

14.10 How HMRC will know the duty has been paid

HMRC will be able to establish sales of Avtur for private pleasure purposes in the course of routine assurance visits to suppliers and will be able to check if subsequent duty payments have been made by declarants. They may contact you during the course of these enquiries.

15. Penalties

Situations where a civil penalty under section 9 of the Finance Act 1994 may be imposed include failure by users to:

  • make a declaration that Avtur is intended to be used for private pleasure flying
  • make complete and accurate declarations
  • pay the duty by the due date

Penalties of £250 or 5% of the duty due (whichever is greater) and where appropriate daily penalties of £20 after the due date that payment of duty remains outstanding may be imposed for each contravention.

16. Assessments

Where a person fails to pay the duty on fuel used for private pleasure flying (whether that person has made a declaration or not) the Commissioners of Revenue and Customs have the powers to assess the amount of duty due. A civil penalty may also be imposed.

17. Definition

‘Private pleasure flying’ is defined in the Hydrocarbon Oil Duties Act 1979 as:

‘The use of an aircraft by its owner or the natural or legal person who enjoys its use either through hire or through any other means, for other than commercial purposes and in particular other than for the carriage of passengers or goods or for the supply of services for consideration or for the purposes of public authorities.’.

The nil rate of duty does not apply to Avtur used in an entity’s own aircraft that is used for the transportation of staff for business purposes without consideration.

The following are considered to be private pleasure flying and are not eligible for fuel duty relief (this is not a definitive list):

  • transportation of staff in corporate jets or helicopters – if you transport your staff on your corporate jet or helicopter to attend a business meeting or trade fair, the fuel duty exemption will no longer be applicable as this is now considered to be private pleasure flying – the supply of air services for consideration must be the inherent reason for the aircraft’s movements in order to be eligible for this relief – a company using its own aircraft to transport its own staff is not providing air services for consideration
  • transportation of business clients – if you have a corporate jet or helicopter and you use this to transport your clients and customers for no consideration, you can no longer claim exemption on the fuel duty relief as this is now considered as private use
  • flying for recreational purposes, whether alone or carrying passengers unless they’re fee paying
  • flying as a means of personal transportation other than for business purposes

The following are considered not to be private pleasure flying and are eligible for fuel duty relief (this is not a definitive list):

  • the use of an aircraft by a company for the carriage of passengers or goods, if there is a consideration for transportation services provided
  • flying in support of emergency services such as police, air ambulance, search and rescue and medical repatriation and transport of medical and humanitarian supplies is considered not to be private pleasure flying
  • provision of air transportation services for a consideration, for example air taxis
  • training – if provided through an approved training school or by a qualified instructor and the trainee pilot is under the supervision of an instructor whether that instructor accompanies the student or not
  • mail services and freight services provided for a consideration
  • agricultural, aerial survey, aerial photography, support for coast guard duties are considered not to be private pleasure flying
  • flying for engineering development and testing – the relief here comes under Article 15(1)(j) of Directive 2003/96
  • international flying – this use remains exempt

18. Avgas

Avgas is a specialised fuel which undergoes a more complex and expensive distillation process than for other fuels to meet the special demands of aviation. It also has a number of unique characteristics.

A new fiscal definition for avgas with its own free-standing duty rate has been introduced into HODA 1979. The definition is as follows:

‘aviation gasoline’ means light oil which – (a) is specially produced as fuel for aircraft, (b) at 37.8°C, has a Reid Vapour Pressure of not less than 38kPa and not more than 49kPa, and (c) is delivered for use solely as fuel for aircraft.

All avgas is subject to the same duty rate irrespective of its use, commercial, business or private pleasure flying.

The duty rate may be obtained from the Excise helpline or from Excise Duty – Hydrocarbon oils rates.

19. Glossary of terms

Term Description
Aviation gasoline (avgas) Light oil which is specially produced as fuel for aircraft, at 37.8°C has a reid vapour pressure of not less than 38kPa and not more than 49kPa, and is delivered for use solely as fuel for aircraft.
Aviation turbine fuel (Avtur) Unmarked kerosene for use as fuel for aircraft engines and delivered under a marking waiver.
Bioblend A mix of diesel and biodiesel.
Helpline HMRC’s advice service to trade and public.
Kerosene Heavy oil of which more than 50% by volume distils at a temperature not exceeding 240°C. Kerosene is also known as paraffin or burning oil.
Marked gas oil Gas oil that contains fiscal markers signifying that it’s rebated and cannot be used as a road fuel. It’s also known as ‘red’ or ‘red diesel’ because of the red dye used to mark it, and for the purposes of this notice marked gas oil also refers to marked bioblend.
Rebate The difference between the full rate of duty and the reduced rate allowed on some types of oil when put to certain uses.
Registered dealer in controlled oils Anyone approved by HMRC to sell or deal in controlled oils. Controlled oils are marked rebated gas oil (red diesel) and marked rebated kerosene (paraffin, burning oil, and so on).

20. Forms and declaration

20.1 How to complete the repayment claim form

You need to:

  1. Open it using the the latest free version of Adobe Reader.

  2. Print and complete it manually.

  3. Send it to the address shown on the form.

Claim form for repayment of fuel duty on diesel supplied to private pleasure craft – Northern Ireland

This file may not be suitable for users of assistive technology.

Request an accessible format.
If you use assistive technology (such as a screen reader) and need a version of this document in a more accessible format, please email different.format@hmrc.gov.uk. Please tell us what format you need. It will help us if you say what assistive technology you use.

Read the accessibility statement for HMRC forms.

Email HMRC to ask for this form in Welsh (Cymraeg).

20.2 How to complete the private pleasure craft user declaration

You need to:

  1. Open it using the the latest free version of Adobe Reader.

  2. Print and complete it manually.

  3. Send it to the address shown on the form.

Private pleasure craft user declaration for fuel duty relief – Northern Ireland

This file may not be suitable for users of assistive technology.

Request an accessible format.
If you use assistive technology (such as a screen reader) and need a version of this document in a more accessible format, please email different.format@hmrc.gov.uk. Please tell us what format you need. It will help us if you say what assistive technology you use.

Read the accessibility statement for HMRC forms.

Email HMRC to ask for this form in Welsh (Cymraeg).

20.3 How to complete the supplier registration form

You need to:

  1. Open it using the the latest free version of Adobe Reader.

  2. Print and complete it manually.

  3. Send it to the address shown on the form.

Registration form to claim repayment of fuel duty relief for private pleasure craft – Northern Ireland

This file may not be suitable for users of assistive technology.

Request an accessible format.
If you use assistive technology (such as a screen reader) and need a version of this document in a more accessible format, please email different.format@hmrc.gov.uk. Please tell us what format you need. It will help us if you say what assistive technology you use.

Read the accessibility statement for HMRC forms.

Email HMRC to ask for this form in Welsh (Cymraeg).

21. Your rights and obligations

Your Charter explains what you can expect from us and what we expect from you. For more information go to Your Charter.

22. Help us improve this notice

If you have any comments or suggestions to make about this notice, write to:

HMRC
Transport Taxes Team
100 Parliament Street
London
SW1A 2BQ

23. Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

24. How HMRC uses your information

Find out how HMRC uses the information we hold about you.

Published 1 October 2021
Last updated 3 December 2021 + show all updates
  1. The postal address to send payment returns to in section 6.1 of the notice has been updated.

  2. Additional information about payment methods has been added.

  3. First published.