Urgent in-put needed to request reduction, not increase in UK tax on Biodiesel

Maxey L. l.maxey at swansea.ac.uk
Thu Aug 24 18:09:00 BST 2006

Apologies for cross-points:

The UK Government is currently reviewing the definition and taxation of
Biodiesel and vegetable oil. It appears that this COULD lead to their
increased in taxation from 27/1p/l to 47.1p/l !! At the very least this
revue represents a valuable opportunity for individuals and organisations to
have an in-put into this issue and help bring UK policy in line with more
climate change/pollution savvy governments who exempt Biodiesel and
vegetable oil from fuel tax as they are almost CO2 neutral and far less
carcinogenic to humans and other life.

Pasted below is a draft response and the document from HMRC website.

Plese send a response to 

envirotax.bst at hmrc.gsi.gov.uk

ASAP and by 31st Aug at latest, many thanks, Larch

Dear madam/sir, 
I am writing to urge that the current review recommend zero fuel tax on
biodiesel and veg oil, in line with Germany, France, Italy and most European
nations, as these fuels offer huge CO2 savings compared with fossil fuels.
As almost CO2 neutral fuels biodiesel and veg oil offer potential to help
reduce climate change when employed alongside policies to reduce the demand
for travel and energy.
In particular, the tax regime should fully embrace the climate change
implications of different fuels, with LPG treated more favourably than
fossil diesel/petrol, yet far less favourably than Biodiesel/straight veg
oil. Within the Biodiesel/straight veg oil realm, products derived from used
veg should be treated more favourably than virgin oil, thus my proposal for
a tax regime is:
47.1p/l - fossil diesel/petrol
27.1p/l - LPG (currently 9p/l)
9 p/l - Biodiesel/straight veg oil from virgin oil
0 p/l - Biodiesel/straight veg oil from used oil 
I look forward to hearing from you and hearing of the steps being taken to
bring about a more enlightened fuel tax regime in the UK soon,
 yours sincerely,

>From HMRC website:

Review of the fiscal definition of biodiesel: background, terms of reference
and how you can contribute to the review

1. The current fiscal definition of biodiesel is set out in section 2AA of
the Hydrocarbon Oil Duties Act 1979, as follows:
(1) In this Act "biodiesel" means diesel quality liquid fuel that -
(a) is produced from biomass or waste cooking oil,
(b) the ester content of which is not less than 96.5% by weight, and
(c) the sulphur content of which does not exceed 0.005% by weight or is nil.
(2) In subsection (1) -
(a) "diesel quality" means capable of being used for the same purposes as
heavy oil;
(b) "liquid" does not include any substance that is gaseous at a temperature
of 15 degrees C and under a pressure of 1013.25 millibars;
(c) "biomass" means vegetable and animal substances constituting the
biodegradable fraction of -
(i) products, wastes and residues from agriculture, forestry and related
activities, or
(ii) industrial and municipal waste.
2. This definition was introduced by the Finance Act 2002 following
consultation with stakeholders. The aim of the definition is to ensure that
any fuels which are claimed to qualify for the biodiesel duty rate
(currently 27.10 pence per litre) are in fact biodiesel rather than mineral
diesel. For a fuel to qualify for this duty rate it must meet the definition
in full.
The need to review the definition
3. Budget 2006 announced that the Government would review the current
definition of biodiesel to ensure it remains fit for purpose. HMRC believes
it is desirable to review this definition, because:
·	New biofuels are being developed which are likely to provide
environmental benefits that are similar to or greater than those of
conventional biodiesel, but which would not meet the current definition of
biodiesel and which would therefore be liable to duty as a fuel substitute
at 47.10 pence per litre. HMRC believes it should assess whether any new
fuels should qualify for the reduced rate of duty applicable to biodiesel
(27.10 pence per litre), and, if so, how the definition should be amended to
cater for these fuels.
·	HMRC has received a number of representations both that the existing
definition is too restrictive (for example, in terms of ester content) and,
on the other hand, that it is not sufficiently restrictive (for example,
that it should specifically exclude straight vegetable oil from the scope of
the reduced rate).
4. HMRC believes, therefore, that it is appropriate to consider both whether
any new fuels should qualify for the reduced rate, and whether the current
definition remains fit for purpose in terms of the way it deals with current
types of biodiesel.
Terms of reference
5. The terms of reference for this review are as follows:
·	to consider whether the current fiscal definition of biodiesel set
out in section 2AA of the Hydrocarbon Oil Duties Act 1979 should be amended
to include any new fuels produced from biomass; and whether the current
definition remains fit for purpose in terms of the way it deals with current
types of biodiesel
·	to take forward this review in discussion with other Government
departments, industry stakeholders and other interested parties
·	to report progress at Pre-Budget Report 2006.
6. If Treasury Ministers were minded to make any changes to amend the
definition, any amendment would be given effect by statutory instrument (a
Treasury order under section 2A(1A) of the Hydrocarbon Oil Duties Act 1979).
HMRC guidance on eligibility for the reduced rate for biodiesel would be
revised as necessary.
7. Contributions to the review are welcome, and HMRC will consider all
representations it receives. These should be sent to
envirotax.bst at hmrc.gsi.gov.uk by 31 August 2006. Any requests for a meeting
should also be made to this address.

More information about the Diggers350 mailing list