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HMRC internal manual

Spirits Production Manual

Technical guidance: Can a distiller dispose of fusel oils without paying excise duty?

Yes. A distiller is permitted to skim off any oil which has separated from feints, or has collected in oil traps and hot feints receivers. However, before fusel oil can be disposed of the distiller must ensure that the oil contains no more than 8.7% alcohol (ethanol) by volume. Oils containing higher levels of ethanol must undergo further processes (washings) to reduce the ethanol content to 8.7% or below.

Fusel oil may be destroyed or used free of spirits duty for the following purposes:

  • recovery of higher alcohols;
  • use in perfume bases; and
  • use as a fuel.

Note: If the fusel oil is to be used in place of a mineral oil to fuel any engine, motor or other machinery, it is classed as a fuel substitute and is liable to the light oil rate of duty. Excise duty is not chargeable if the fusel oil is used as a heating fuel. Please see notice 179e Biofuels and other fuel substitutes.

For further information on this point, please contact the Oils Policy team in ECSM