OILS DUTY (HC0)
Hydrocarbon oils duty is paid to HMRC on motor and heating fuels produced, imported or used in the UK. The duty is payable at varying rates, dependant on the type of fuel and its use. The duty covers hydrocarbon (mineral) oils, biofuels, fuel substitutes and fuel additives.
Reliefs or refunds may apply in specific circumstances, or if the fuel is exported for use outside the UK.
Hydrocarbon (mineral) oils are any organic compounds consisting of hydrogen and carbon. They are the principal constituents of petroleum and natural gas, and serve as fuels, lubricants and raw materials for production of plastics, fibres, rubbers, solvents, explosives and industrial chemicals.
Any company who produces these products and that are liable for fuel duty must store the oils in a premise that is approved by and registered with HMRC as an excise warehouse. The duty is liable to be paid to HMRC when they leave the warehouse. A lower rate of duty may be applicable, for example in the case of red diesel and marked kerosene.
Biofuels: Biodiesel is a liquid fuel produced from biomass or waste cooking oil that is suitable for use in diesel engines. Bioethanol is a liquid fuel consisting of ethanol produced from biomass and is capable of being used for the same purposes as light oil.
Fuel substitutes: A 'fuel substitute' is any liquid (except water under certain circumstances) that is not hydrocarbon (mineral) oil, biodiesel, bioethanol or bioethanol blend that is used to fuel any engine, motor or other machinery or is added to motor fuel. This means it will be liable for Fuel Duty.
Fuel additives: Any liquid that is added into the fuel supply of vehicles either via the filler cap or other parts of the fuel system is classed as a 'fuel additive'.
Biofuels and other fuel substitutes are liable for Fuel Duty when they are intended for use as a fuel for any engine, motor or other machinery, or as an additive or extender in fuel, or to be blended with hydrocarbon oil. They are not liable for duty then they are intended for other specific uses, such as heating fuel.
When biofuels and fuel substitutes are liable for Fuel Duty, the duty is due at the earliest of the following points:
- when they are sent out from premises registered for production
- when they are used as a motor fuel
- when the decision has been made that they are going to be used as a motor fuel (known as being 'set aside' as motor fuel).
The rate of duty on biofuels, fuel substitutes and additives is worked out using the proposed or actual use of the fuel and the type of engine. For example, if a substitute or additive is to be used as a road fuel in a diesel engine, then the rate of duty for diesel for road use will apply.
Rates of duty are in pence per litre, although there are certain types of road fuel gas that are dutied per kilogram of fuel. For more information on duty rates, see page 8.
For rates you may access: https://www.gov.uk/guidance/fuel-duty