Hydrocarbon oil duty
Encyclopedia
Hydrocarbon oil duty is fuel tax
levied on some fuels used by road
vehicle
s in the United Kingdom
. Between 1993 and 1999 the Government's Fuel Price Escalator
led to significant rises in the cost of fuel which led to fuel tax protests in 2000, 2005 and 2007. In May 2008, UK fuel tax rates were one of the highest in Europe. Some vehicles including local bus services, some farm and construction vehicles and aviation pay reduced or no fuel duty. With the exception of gas, rates don't vary by fuel type.
VAT
at the current rate is then added to the total price.
The following table shows the retail price of petrol and diesel (pence per litre) for a selection of untaxed prices:
The government revenue from Fuel Duty was £25.894 billion in 2009, with a further £3.884 billion being raised from the VAT on the duty.
(VAT) due to the Convention on International Civil Aviation
, which came into effect in 1947.
provides a fuel duty rebate to local bus service operators. As of April 2010 the rebate was £0.43 for diesel, £0.2360 for road fuel gas other than natural gas and 100% for biodiesel and bioethanol. Additional rebates are available for increasing fuel efficiency, low carbon emission vehicles and equipping vehicles with Smartcards and GPS tracking equipment.
do not receive a general fuel duty rebate, though in 2006 the duty on biofuels was reduced from 53p to 8p to encourage the its introduction for train use.
1½d (£0.056).
In 1919, after several years of steady petrol price rises, petrol duty was abolished and replaced by vehicle taxation
, and the tax disc based on horsepower. Immediately after the tax was removed petrol was about 4s (£0.20) per UK gallon.
By 1928, after market reductions in the cost of a UK gallon of fuel to about 1s 2½d (£0.06), the Government decided to once again charge duty on fuel, the new rate was 4d (£0.017) per UK gallon - bringing the cost of a UK gallon of petrol to 1s 6¾d (£0.078).
Between 1993 and 1999 the Government's Fuel Price Escalator
led to significant rises in the cost of fuel which led to fuel tax protests in 2000, 2005 and 2007.
In May 2008, UK fuel tax rates were one of the highest in Europe. The UK tax was £0.55 per litre for diesel and £0.52 for unleaded petrol, where the other countries' rates for diesel ranged from £0.19 per litre in Estonia and Lithuania to £0.37 per litre in Germany, and for petrol from £0.23 per litre in Estonia and Lithuania to £0.54 per litre in the Netherlands.
Fuel tax
A fuel tax is an excise tax imposed on the sale of fuel. In most countries the fuel tax is imposed on fuels which are intended for transportation...
levied on some fuels used by road
Road
A road is a thoroughfare, route, or way on land between two places, which typically has been paved or otherwise improved to allow travel by some conveyance, including a horse, cart, or motor vehicle. Roads consist of one, or sometimes two, roadways each with one or more lanes and also any...
vehicle
Vehicle
A vehicle is a device that is designed or used to transport people or cargo. Most often vehicles are manufactured, such as bicycles, cars, motorcycles, trains, ships, boats, and aircraft....
s in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. Between 1993 and 1999 the Government's Fuel Price Escalator
Fuel Price Escalator
The Fuel Price Escalator was the practice of automatically increasing hydrocarbon oil duty in the United Kingdom ahead of inflation. The escalator was introduced as a measure to stem the increase in pollution from road transport and cut the need for new road building which was then a politically...
led to significant rises in the cost of fuel which led to fuel tax protests in 2000, 2005 and 2007. In May 2008, UK fuel tax rates were one of the highest in Europe. Some vehicles including local bus services, some farm and construction vehicles and aviation pay reduced or no fuel duty. With the exception of gas, rates don't vary by fuel type.
Rates and receipts
The rates as of 23rd March 2011 are as follows:| Fuel | rate | note |
|---|---|---|
| Petrol | £0.5795 | per litre |
| diesel | £0.5795 | per litre |
| biodiesel Biodiesel Biodiesel refers to a vegetable oil- or animal fat-based diesel fuel consisting of long-chain alkyl esters. Biodiesel is typically made by chemically reacting lipids with an alcohol.... |
£0.5795 | per litre |
| bioethanol | £0.5795 | per litre |
| Road fuel gas other than natural gas | £0.3304 | per kg |
| Natural gas used as road fuel (inc biogas) | £0.2615 | per kg |
VAT
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
at the current rate is then added to the total price.
The following table shows the retail price of petrol and diesel (pence per litre) for a selection of untaxed prices:
| Untaxed price | Retail price | Tax |
|---|---|---|
| 50 | 129.54 | 61.4% |
| 55 | 135.54 | 59.4% |
| 60 | 141.54 | 57.6% |
The government revenue from Fuel Duty was £25.894 billion in 2009, with a further £3.884 billion being raised from the VAT on the duty.
Aviation
Jet Fuel (not AVGAS) is exempt from fuel duty and value added taxValue added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
(VAT) due to the Convention on International Civil Aviation
Convention on International Civil Aviation
The Convention on International Civil Aviation, also known as the Chicago Convention, established the International Civil Aviation Organization , a specialized agency of the United Nations charged with coordinating and regulating international air travel...
, which came into effect in 1947.
Buses
The Bus Service Operators GrantBus Service Operators Grant
The Bus Service Operators Grant is a scheme that refunds some of the Fuel Duty incurred by operators of registered local bus services in the United Kingdom...
provides a fuel duty rebate to local bus service operators. As of April 2010 the rebate was £0.43 for diesel, £0.2360 for road fuel gas other than natural gas and 100% for biodiesel and bioethanol. Additional rebates are available for increasing fuel efficiency, low carbon emission vehicles and equipping vehicles with Smartcards and GPS tracking equipment.
Coaches
Coaches, including UK express coach services pay taxation as per other general motorists. A proposal that long-distance scheduled coach services would receive the rebate in return for offering half-price fares to older and disabled passengers was considered by the government in 2001.Construction and farm vehicles
Registered construction and farm vehicles 'Red diesel' which includes a fuel dye has a significantly reduced tax levy compared to normal road fuel. This can only be used in registered agricultural and construction vehicles including tractors, excavators, cranes and there are heavy fines for misuse.Trains
UK train operatorsTrain operating company
The term train operating company is used in the United Kingdom to describe the various businesses operating passenger trains on the railway system of Great Britain under the collective National Rail brand...
do not receive a general fuel duty rebate, though in 2006 the duty on biofuels was reduced from 53p to 8p to encourage the its introduction for train use.
History
1909 saw the introduction of petrol duty in the UK, with the rate being set at 3d (£0.013) per UK gallon, bringing the price of a typical UK gallon to 1sShilling
The shilling is a unit of currency used in some current and former British Commonwealth countries. The word shilling comes from scilling, an accounting term that dates back to Anglo-Saxon times where it was deemed to be the value of a cow in Kent or a sheep elsewhere. The word is thought to derive...
1½d (£0.056).
In 1919, after several years of steady petrol price rises, petrol duty was abolished and replaced by vehicle taxation
Vehicle excise duty
Vehicle Excise Duty is a vehicle road use tax levied as an excise duty which must be paid for most types of vehicle which are to be used on the public roads in the United Kingdom...
, and the tax disc based on horsepower. Immediately after the tax was removed petrol was about 4s (£0.20) per UK gallon.
By 1928, after market reductions in the cost of a UK gallon of fuel to about 1s 2½d (£0.06), the Government decided to once again charge duty on fuel, the new rate was 4d (£0.017) per UK gallon - bringing the cost of a UK gallon of petrol to 1s 6¾d (£0.078).
Between 1993 and 1999 the Government's Fuel Price Escalator
Fuel Price Escalator
The Fuel Price Escalator was the practice of automatically increasing hydrocarbon oil duty in the United Kingdom ahead of inflation. The escalator was introduced as a measure to stem the increase in pollution from road transport and cut the need for new road building which was then a politically...
led to significant rises in the cost of fuel which led to fuel tax protests in 2000, 2005 and 2007.
In May 2008, UK fuel tax rates were one of the highest in Europe. The UK tax was £0.55 per litre for diesel and £0.52 for unleaded petrol, where the other countries' rates for diesel ranged from £0.19 per litre in Estonia and Lithuania to £0.37 per litre in Germany, and for petrol from £0.23 per litre in Estonia and Lithuania to £0.54 per litre in the Netherlands.
External links
- Hydrocarbon Oils Duty Rates UK HM Revenue & Customs website
- Hydrocarbon Oils: Customs Duty UK HM Revenue & Customs website
- 2011 Hydrocarbon Oil Duty Rates UK HM Revenue & Customs website