Hydrocarbon oil duty

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Hydrocarbon oil duty is the name given to the excise duty levied on oils (mainly road vehicle fuels) in the United Kingdom. It is also commonly known as fuel duty and fuel tax.

The current rates payable for the various types of oil are available online[1].

1 History
2 Public transport rebates
3 Recent developments
4 See also
5 References
6 Notes
7 External links

[edit] 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 1s 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 lead to significant rises in the cost of fuel.

[edit] Public transport rebates

The Bus Service Operators Grant provides a fuel duty rebate to local bus service operators. As of 2006 the rebate was 81% for ultra low sulphur Diesel, and 100% for Bioethanol, Biodiesel and Liquefied petroleum gas.[2] This rebate was previously known as the Fuel Duty Rebate. Until 1994 the level of the rebate was 100%,[3], but by 1999 had been reduced to about 67%.[4]

Train operators do not receive a general fuel duty rebate,[5] though in 2006 the duty on biofuels was reduced from 53p to 8p to encourage the its introduction for train use.[6]

Aircraft fuel is exempt from fuel duty and value added tax (VAT) due to the Convention on International Civil Aviation, which came into effect in 1947.[7]

[edit] Recent developments

The 2006 fuel duty rate was £0.471 per litre (£2.14 per UK gallon) of ultra-low sulphur unleaded petrol/diesel, in addition to which VAT is added, at the rate of 17.5%, to the total price of the fuel including the added duty.

In the December 2006 Pre-Budget Report ^[1] the Government announced a rise to the above duty to £0.4835 per litre (£2.198 per UK gallon), effective from midnight on Wednesday 6th December, and stated that fuel prices should rise each year 'at least in line with inflation'. Fuel duty currently raises about £23.5 Billion per year^[2] for the treasury.

The government is currently considering a transition to Road Pricing, as at least a partial replacement for fuel duties.