From the 1st November 2008
used for propulsion the balance as a percentage for domestic use. HMRC
and the industry suggest a split of 60% for propulsion and 40% for
domestic use, but the apportionment split is purely down to the owners
intended usage and a level of honesty is required. After all HRMC may
review the situation if the system does not work.

The wording prescribed by HMR&C for this declaration is:-

“I declare that [ ] % of the fuel purchased will be used for
propelling a private pleasure craft? and then the owner will be asked
to pay the full rate of duty on the declared proportion of the fuel
purchased. The vendor may also have a form to complete. Once the
declaration is made there is nothing more to do.

HMRC have confirmed that VAT is charged at the reduced rate of 5% on
fuel for propulsion and domestic use. A worked example is given below

This example assumes a 60% (propulsion) and 40% (domestic) split for
a purchase of 100 litres of red diesel (the price of diesel is assumed
to be 0.70ppl which includes 9.69ppl duty already paid to fuel
supplier):

Propulsion calculation (i.e. 60%)

• 60 litres @ 0.70ppl = £42
• 60 litres @ 0.4066 = £24.40 (additional duty)
• VAT @ 5% = £3.32
• Propulsion Total = £69.72

Domestic calculation (i.e. 40%)

• 40 litres @ 0.70ppl = £28
• VAT @ 5% = £ 1.40
• Domestic Total = £29.40
• Transaction Total = £99.12

Don’t forget to keep invoices on board if travelling abroad on your boat where legislation for ,
fuel suppliers and the HRMC can make the system work.

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