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HMRC internal manual

Oils Technical Manual

HM Revenue & Customs
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Introduction and overview of oils activity: background to UK oils activity: Duty liability

Oil imported into the UK from third countries direct or imported duty-suspended via other EU countries, is liable to customs duty. All oil produced within the UK or supplied to the UK is liable to excise duty, when it is released to home use from production or importation, (although in some circumstances it is partially or fully rebated).

Payment of excise duty and VAT may be suspended if the oil is placed into a tax warehouse. Customs duty must be paid before the oil is placed into a tax warehouse unless this is approved as both a customs warehouse and as an excise warehouse. Where customs duty is suspended, this must be paid before the oil is taken for process. Excise duty and VAT are due when either the oil or the oil products produced from this are removed to home use.

Oil used for private pleasure craft (propulsion) and private flights attract the full rate of duty.

Biofuel and fuel substitutes (products not consisting of hydrocarbon oil) are also subject to excise duty in the same way as hydrocarbon oil, when used as motor fuel, but biofuel does not attract duty if used as heating fuel.