Tax on Biofuels

If the idea of free or cheap green fuel appeals then you have probably considered using biodiesel, waste vegetable oil (WVO) or straight vegetable oil in your vehicle. However life is never that simple.

HM Revenue and Customs - Excise Duty on Biofuels

Tax (excise duty) is payable on any fuel used to power any vehicle whether it is home-made biodiesel or even if you want to pour vegetable oil from the supermarket into your tank. Currently (July 2013) the levels of tax per litre are:

Biodiesel 57.95p
non Road Fuel 11.14p
Bioethanol 57.95p

The excise duty for biofuels was set in the 2002 Budget at 20p per litre less than the duty on ultra low sulphur diesel (ULSD), and that remained in force until 2010. The duty payable has subsequently doubled to its current (high) level. A full list of up to date hydrocarbon oil duty rates is available here on the HM Revenue and Customs website. Note that the duty payable per litre of biodiesel/bioethanol is now identical to that payable for unleaded petrol or ordinary diesel for road vehicles, and the non-road use biodiesel/bioethanol duty is the same as that payable for non-vehicle use kerosene. (But, note that if you produce/use less than 2,500 litres per year you are an exempt producer – read on for more information.

For a couple of years after 2010 the 20p per litre differential was retained for waste vegetable oil (WVO) / used cooking oil (UVO) which meant it was cheaper to use these fuels during this time, but since April 2012 the duty payable for all oils/biodiesel/bioethanol used as fuel in vehicles has been set to the same as that for ordinary diesel.

Exempt Producers and Users

If you produce and/or use less than 2,500 litres per year of biofuel, and expect to continue at or below this rate of production/use, then you are considered to be an exempt producer. In this case you do not have to register with HMRC, nor do you have to pay any duty. You are however legally required to keep records of a) the date of each supply and/or use, and b) the amount of supply of own use. These records must be preserved for six years.

Legal Requirements and Forms for Biofuel Producers

Producers of biodiesel (a definition which includes those that use WVO and SVO in their vehicles) must register with HM Revenue and Customs using form EX103. Detailed records and receipts must then be kept of biofuel use and submitted using form HO930 which will be sent out to you each month.
If you are a private individual and not a company make sure you obtain the EX103 and not the EX103A.

When you have completed your EX103 send it to: HMCE, Mineral Oils Relief Centre, Dobson House, Regent Centre, Gosforth, Newcastle-on-Tyne NE3 3PF. If you are unsure of how to fill in your monthly HO930 declaration then obtain the 179E leaflet from HM Customs and Excise or view Notice 179E – Biofuels and Other Fuel Substrates (PDF) online here.

179E also lists conditions which must be met by the fuel for it to be eligible for the reduced duty rate – for example, biodiesel made with a recipe including hydrocarbons such as white spirit or kerosene is not eligible.

Contacting HM Customs and Excise

If you would like to request forms and ask advice then HM Customs and Excise have a national enquiries help line open from 8am-8pm Monday to Friday. Call 0845 010 9000 or 020 8929 0152 if you don’t want to pay the premium cost of an 0845 number!
The HM Customs and Excise website is here where a lot of information can be found with a lot of searching.

Obtaining Forms

Click here to download the EX103 Form, and here for the HO930 Form from the HM Customs and Excise website.