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HMRC internal manual

Biofuels and Fuel Substitutes Assurance

Background: Duty rates


Duty rates for biofuels and all other fuel duties are available on the GOV.UK website.

Until 2010, biodiesel and bioethanol had an excise duty rate of 20 pence per litre less than the road diesel/petrol rates. From 2010 to 2012 the duty incentive was retained only for biodiesel produced from used cooking oil. However in order to qualify for these lower rates these products must have been shown to fully meet the relevant fiscal definitions. Since 2012 biofuels have had the same duty rate as road diesel/petrol.

Bioblend and bioethanol blends were taxed according to the ratio of biodiesel and bioethanol in the blends.

For example – 5% @ biodiesel rate and 95% @ SFD rate. Producers were required to be able to support the apportionment from their production and blending records. The proportions are to be calculated to the nearest 0.001%.

Under the Hydrocarbon Oil Duties Act 1979 Sections 6AB(5) and 6AE(5) we can charge the total volume of blends at the rate for the heavy oil used where we are not satisfied with the separately declared portions.

Biodiesel used for off-road purposes has its own published duty rate. Off-road users will have to pay the full biodiesel rate and reclaim the difference.

The procedure for obtaining repayments is set out in Notice 179E

Fuel substitutes

Under Section 6A of HODA Fuel substitutes are charged at the same duty rate as the hydrocarbon oil to which they are most closely equivalent and for which they are used as a substitute.

The rates of duty for fuel substitutes are set out in the Other Fuel Substitutes(Rates of Excise Duty etc) Order 1995 Section 4.

The rates of excise duty for fuel substitutes

  • for use with a diesel engine is that of Sulphur Free Diesel (SFD)
  • for use with a petrol engine powered by leaded petrol is that of light oil (other than ULSP or SFP)
  • for use with a petrol engine powered by unleaded petrol is that of Sulphur Free Petrol (SFP)

But where a fuel substitute is equally suitable for use with a number of different engines, the rate of excise duty is that of light oil (other than ULSP or SFP).