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HMRC internal manual

Biofuels and Fuel Substitutes Assurance

Background: Overview


This guidance covers the production, distribution and use of biofuels, including biodiesel, bioblend, bioethanol, bioethanol blend, and of other fuel substitutes.


Section 2AA of The Hydrocarbon Oil Duties Act 1979 (HODA) describes biodiesel as a diesel quality liquid fuel that is produced from biomass or waste cooking oil, and has an ester content which is not less than 96.5% by weight and a sulphur content not exceeding 0.005%.

Biodiesel may be produced in entered premises in quantities above registration threshold of 2,500 or more litres per annum. It may also be produced in a tax warehouse subject to approval.

Biodiesel may also be produced in quantities of less than 2,500 litres by exempt producers who do not have to register their premises or pay duty. There are two methods commonly used in the production of biodiesel using oils or fats of animal and/or vegetable origin: transesterification and methods involving filtration and blending. Some SVO, most notably rapeseed oil, can qualify as biodiesel, however it is unlikely that this would be suitable for large-scale commercial production because of the variable quality of the fuel.

For further information on the production of biofuels, and in particular for the use of transesterification and of filtration and blending, please see HCOBIG4300


Section 2AB of HODA describes bioethanol as ethanol produced from biomass. It can only be produced in a tax warehouse. Details of the approved denaturants are contained in Notice179E under ‘Bioethanol – the approved formulation’.


Biodiesel may only be blended in a tax warehouse with non-duty paid ordinary diesel to produce bioblend. Bioblend commonly consists of 5% biodiesel blended with 95% diesel, but can also be blended in other proportions. Duty paid biodiesel may also be mixed with duty paid ordinary diesel (HODA 6AB(2) (b)).

Bioethanol blend

Bioethanol may only be blended in a tax warehouse with non-duty paid ordinary petrol to produce bioethanol blend. Bioethanol blend commonly consists of bioethanol blended with 95% petrol. (HODA 6AE(2) (b)).

Fuel substitutes

Fuel substitutes are defined in HODA Section 6A as any liquid which is not a hydrocarbon oil, biodiesel, bioblend, bioethanol or bioethanol blend, but which is used as a fuel for any engine, motor or other machinery.