HMRC: Hydrocarbon Oil Excise Duty Rates Updated, Reduced Duty Extended to 2027

• HMRC has updated `hydrocarbon oil excise duty rates` for light oils, heavy oils, biofuels, and road fuel gases, effective March 23, 2022.
• The reduced rate of fuel duty has been extended from December 31, 2026, to July 2027.
• The `Avgas excise duty increase` sets the rate for aviation gasoline at £0.3629 per litre.
• New guidance has been added for excepted machines using Kerosene and Biodiesel blended with gas.
• `Carbon Price Support Fuel Duty` rates have also been revised as part of the updates.

Compliance officers and legal counsel for businesses involved in the production, import, or distribution of hydrocarbon oils in the UK must review these updated excise duty rates and the extended reduced fuel duty period to ensure accurate tax calculations, financial forecasting, and ongoing compliance with HMRC regulations, particularly regarding Avgas and Carbon Price Support.

Her Majesty's Revenue and Customs (HMRC) has recently announced significant revisions to the excise duty rates applicable to hydrocarbon oils. These updates, which became effective at 6 PM on March 23, 2022, encompass a broad range of fuel types, including light oils, heavy oils, biofuels, and road fuel gases. The adjustments reflect ongoing governmental policy regarding fuel taxation and are crucial for businesses involved in the production, import, or distribution of these commodities.

Among the specific changes, the rate for Avgas, or aviation gasoline, has seen an increase, now set at £0.3629 per litre. This particular `Avgas excise duty increase` is a notable point for the aviation sector. Furthermore, the 'from date' within the 'Light oils' section of the guidance has also been updated, indicating a recalibration of how these specific `HMRC hydrocarbon oil excise duty rates` are applied and tracked over time. These adjustments necessitate a thorough review by all affected parties to ensure compliance and accurate financial planning.

In a move providing some relief and extended certainty for businesses and consumers, the period for the reduced rate of fuel duty has been prolonged. Initially set to conclude on December 31, 2026, the `reduced fuel duty extension 2027` now pushes the end date to July 2027. This extension offers an additional period during which the current reduced `UK fuel duty rates update` will remain in effect, impacting the overall cost structure for various industries reliant on fuel.

This decision provides a longer window for businesses to factor the reduced rates into their operational budgets and strategic planning. Compliance officers and legal counsel for businesses involved in the production, import, or distribution of hydrocarbon oils in the UK must review these updated excise duty rates and the extended reduced fuel duty period to ensure accurate tax calculations, financial forecasting, and ongoing compliance with HMRC regulations, particularly regarding Avgas and Carbon Price Support.

Beyond the direct rate changes, HMRC has also issued new guidance to clarify specific aspects of hydrocarbon oil taxation. This includes detailed information on 'excepted machines' for both Kerosene and Biodiesel when blended with gas. This new guidance is integrated into the existing sections for 'Heavy oils' and 'Biofuels,' providing clearer parameters for how these blended fuels are treated under the excise duty regime.

Additionally, the `Carbon Price Support Fuel Duty` rates have been updated. These rates are a critical component of the UK's environmental taxation framework, designed to incentivize lower carbon emissions. The revisions to the `light oils heavy oils biofuels duty` structure, coupled with the updated Carbon Price Support rates, underscore the evolving regulatory landscape that businesses must navigate to ensure full adherence to HMRC requirements.

The updated HMRC guidance document serves as a comprehensive resource for understanding the `HMRC hydrocarbon oil excise duty rates`. It provides detailed information on the fuel duty payable across a spectrum of products, including light oils, heavy oils, biofuels, and road fuel gases. This breadth of coverage ensures that all major categories of hydrocarbon oils are addressed within the regulatory framework.

Furthermore, the guidance also outlines the specific rates applicable to Registered Dealers in Controlled Oils (RDCOs) and details the `Carbon Price Support Fuel Duty` rates. HMRC classifies this document as essential guidance, emphasizing its importance for all entities operating within the hydrocarbon oil sector. Adherence to the stipulations within this guidance is paramount for maintaining legal and financial compliance.

Compliance officers and legal counsel for businesses involved in the production, import, or distribution of hydrocarbon oils in the UK must review these updated excise duty rates and the extended reduced fuel duty period to ensure accurate tax calculations, financial forecasting, and ongoing compliance with HMRC regulations, particularly regarding Avgas and Carbon Price Support.

Source: Original reporting via GOV.UK guidance