The Court of Justice of the European Union has ruled that the United Kingdom has failed to fulfil its obligations on fiscal marking of gas oils and kerosene.

Most diesel sold in marinas in the UK is red diesel. Red diesel is taxed at a lower rate if some of it is used for heating the boat, or at 100% if it’s used only for propulsion by the engine

Under EU rules, Member States must apply a “fiscal marker” (red dye in the UK) to diesel which is not taxed at the full rate. The Court of Justice of the European Union has concluded that Member States may not apply that marker also to diesel which is taxed at the full rate for propulsion, without undermining the purpose of the marker.

Its judgment declares: “that by allowing the use of marked fuel for the purposes of propelling private pleasure craft, even where that fuel is not subject to any exemption from or reduction in excise duty, the United Kingdom has failed to fulfil its obligations… on fiscal marking of gas oils and kerosene”. The Court dismissed the evidence from HMRC that ending the use of red diesel would be impracticable.

So far a deadline to end the use of red diesel and replace it with white diesel for propulsion of the engine has not been specified. Red diesel will however still be allowed to heat the boat.

The Cruising Association President Judith Grimwade, commented: “We are delighted that the Court has finally delivered a judgment in this case, but given the uncertainties of Brexit, it remains to be seen what the impact will actually be. Whatever the outcome, we will continue to campaign for cruising yachtsmen to be able to travel between countries without being penalised for buying a fuel which is very often the only option available.”

The RYA said that its Cruising, Legal and Government Affairs team is looking into the full impact for their 112,000 members and the recreational boating community – and plans to meet with HMRC to discuss the next steps.