Fuel duty?

[30mog]

Do train operating companies have to pay the same rate of government duty on diesel as a car driver or bus company?

My guess is yes, but generally obtain some kind of bulk buying discount. Meaning they acquire diesel for a discount equalling a retailers profit margin. Not wishing to start a debate just wanting an answer to assist some research I am doing.

 

[Zoidberg]

Do train operating companies have to pay the same rate of government duty on diesel as a car driver or bus company?

...

If Wiki is to be believed;

Trains

UK train operators are required pay full duty rates[15] with the exception of biofuels, for which the duty was reduced from 53p to 8p in 2006[16] and for electrified services.

From http://en.wikipedia.org/wiki/Hydrocarbon_oil_duty#Trains

 

[30mog]

So in actual fact. My educated guess outlined previously is probably a good one? And so the government although subsidising the rail network in billions later reclaim many millions of it?

 

[Mvann]

Railways don't use the same diesel as cars, so the duty rate is different anyway.

 

[Simon11]

Also, I know for my TOC but other TOC's may do as well which is to have a contract for fuel, so they pay X amount for fuel and not the market price.

This reduces the risk in case the cost of fuel goes through the roof

 

[30mog]

Also, I know for my TOC but other TOC's may do as well which is to have a contract for fuel, so they pay X amount for fuel and not the market price.

This reduces the risk in case the cost of fuel goes through the roof

Ahh yes... I believe first bus in South Yorkshire do this. Then one day they announced the third fare hike in a year and put it down to fuel price rises when in fact it had gone DOWN for a few months. Unfortunately they paid HIGH in advance so it can work both ways.

 

[David Barrett]

What the Railways use is classed as Gas Oil, it is Diesel but in a different category for Fuel Duty purposes from DERV (Diesel Engine Road Vehicle). Gas Oil is generally for Industrial and Agricultural use (away from the Queen's Highways that is) whose Duty is lower than DERV and to differentiate between the two a dye is added to Gas Oil, hence the term Red Diesel. You now may appreciate why Customs & Excise, at times, keep a watch on certian Farmers whose Range Rovers have been known to show traces of the dye in their fuel tanks.

Does this answer your question?

 

[Starmill]

Also, I know for my TOC but other TOC's may do as well which is to have a contract for fuel, so they pay X amount for fuel and not the market price.

This reduces the risk in case the cost of fuel goes through the roof

Ahh yes... I believe first bus in South Yorkshire do this. Then one day they announced the third fare hike in a year and put it down to fuel price rises when in fact it had gone DOWN for a few months. Unfortunately they paid HIGH in advance so it can work both ways.

I believe this is called 'fuel hedging'?

 

[Royston Vasey]

What the Railways use is classed as Gas Oil, it is Diesel but in a different category for Fuel Duty purposes from DERV (Diesel Engine Road Vehicle). Gas Oil is generally for Industrial and Agricultural use (away from the Queen's Highways that is) whose Duty is lower than DERV and to differentiate between the two a dye is added to Gas Oil, hence the term Red Diesel. You now may appreciate why Customs & Excise, at times, keep a watch on certian Farmers whose Range Rovers have been known to show traces of the dye in their fuel tanks.

Does this answer your question?

To add to this, chemically it is the same as road fuel, ultra-low sulphur diesel, which was mandated from 2012. Other than cleaner primary emissions as required by EU non-road mobile machinery legislation, this has the side benefit of ensuring backward compatibility with future emission control systems (catalysts) which would be poisoned by sulphur.

 

[Harlesden]

Never understood the concept of excise duty. What gives a government or government department the right to take a cut of a normal consumer transaction that is already subject to VAT?
VAT's predecessor "Purchase Tax" was equally puzzling.

 

[michael769]

What gives a government or government department the right to take a cut of a normal consumer transaction that is already subject to VAT?.

Parliament does.

 

[Cliveblackpool]

Passenger railway tickets are Zero rated VAT.
There is VAT on electricity, fuel, materials repairs etc etc.
Would it be right to say that possibly the TOC's claim back more VAT than they pay?

 

[starrymarkb]

Never understood the concept of excise duty. What gives a government or government department the right to take a cut of a normal consumer transaction that is already subject to VAT?
VAT's predecessor "Purchase Tax" was equally puzzling.

It's a pretty fair tax though. Use less fuel (through efficiency or lower mileage) and pay less tax

 

[Royston Vasey]

It's a pretty fair tax though. Use less fuel (through efficiency or lower mileage) and pay less tax

Agreed. It pays for the substantial upkeep of the free roads across the country (nominally, anyway)

USA - low fuel prices, high toll prices.

The money has to come from somewhere

 

[Bald Rick]

I'm 99% sure that train operators pay duty at the fuel oil rate, ie about 10p a litre.

Hedging worked a treat for the owning groups back in 2007 when the oil price rocketed. They tend to hedge in bulk, combined with their requirements for their bus operations too. If you look in the annual report and accounts for eg First Group or Stagecoach you will see this gets a mention.

 

[Ploughman]

During various fuel shortages.
Key rail staff were authorised to make use of Rail fuel in Road vehicles.
This to ensure that the railway was kept running.

 

[David Barrett]

During various fuel shortages.
Key rail staff were authorised to make use of Rail fuel in Road vehicles.
This to ensure that the railway was kept running.

Highly suspect and debatable unless prior sanction had been given from Government, I can't recall ever seeing or being given any such instruction myself though. Neither would I have thought that the use of unknown grades of Diesel/Gas Oil would have been a good idea in a smaller engined vehicle of modest filtration capability, whilst even though the Diesel Act has been cleaned up a great deal of late as pointed out by Royston Vasey in Post No.9 above, back in the dark (smoke) days there were something like, if my memory is correct, four grades of Diesel; A1, A2, B1 and B2 whose impurity content, sulphur included, varied in relation to grade. Seeing for myself the sludging of filters and lift pumps in smaller engines over a short time span as a result of lower grade fuels being used on occasions and in more than one location drove the message home well and truly.

 

[GB]

Never heard of railway staff being authorised to use railway diesel though that doesn't mean it hasn't happened. I do know that front line railway staff are on the essential services list so if it comes down to it during a fuel crisis you can queue jump and fill up like the emergency services.

 

[73202]

Never heard of railway staff being authorised to use railway diesel though that doesn't mean it hasn't happened. I do know that front line railway staff are on the essential services list so if it comes down to it during a fuel crisis you can queue jump and fill up like the emergency services.

Certainly did happen. When I called in at local plant depot railway road vehicles where topping up with red diesel. Asked storeman about it and was told they had to record exact amounts so used and then were charged the appropriate tax difference between white and red.

 

[Zoidberg]

Certainly did happen. When I called in at local plant depot railway road vehicles where topping up with red diesel. Asked storeman about it and was told they had to record exact amounts so used and then were charged the appropriate tax difference between white and red.

Ah, this wasn't rail staff's vehicles as alluded to earlier, then. That makes more sense.

 

[73202]

It was company vehicles that I saw being so filled lorries, vans etc. Not sure if it applied to private vehicles.

 

[fireftrm]

When I called in at local plant depot railway road vehicles where topping up with red diesel. Asked storeman about it and was told they had to record exact amounts so used and then were charged the appropriate tax difference between white and red.

Red diesel can only be used in agricultural and plant vehicles (like cranes, tar sprayers and road rollers) when on the road. Agricultural vehicles are limited to their road mileage before their exemption is nullified. NO other vehicles can, so the cars/vans were being used illegally and there is no such thing as payin gthe extra tax - it is simply illegal!!
Company cars, vans, lorries etc would be equal in being used illegally. Red diesel must not be used in vehicles used on the public highway. outside the very few exemptions. What you observed was excise evasion and a very serious criminal offence.

PS I worked on resilience arrangements for the emergency services during the fuel strikes of the early 2000s (farmers revolt) and there was no provision for the use of red diesel by the Police, Fire or Ambulance services - so I cannot believe the railway companies had approval. All we had was access to the limited fuel supplies at petrol stations, as did teachers and NHS staff. This was on production of ID cards to ensure public services were maintained by staff being able to get to work. Emergency service vehicles were able to use the same and the blue light services entered into agreements to pool fuel resources and cease any non-emergency driving. Red diesel? NO!!

 

[edwin_m]

When you refer to "railway road vehicles" do you mean road-rail vehicles? These might come under fireftrm's exceptions.

 

[73202]

When you refer to "railway road vehicles" do you mean road-rail vehicles? These might come under fireftrm's exceptions.

These were normal road vehicles transit/sherpa vans etc. As I understand it they had special dispensation from HMRC to use red diesel providing all details of fuel so used was documented and declared so as the tax for use on the road could be paid.

 

[sevenhills]

So in actual fact. My educated guess outlined previously is probably a good one? And so the government although subsidising the rail network in billions later reclaim many millions of it?

I am surprised that train transport pays the full fuel duty, the fuel duty rebate is set at 61% of the tax, but I believe it only goes to local bus transport. It has recently been reviewed. It does seem daft to subsidise public transport, only to tax it.

 

[michael769]

During interruptions to fuel supplies is is normal for the Scottish Government to authorise the use of red diesel in road vehicles (subject to restriction). This was certainly the case during the sortages caused by propective industrial action that occuers a cople of years ago in Scotland.

 

[fireftrm]

During times of fuel shortages red diesel would also be in short supply!

 

[TB93]

During times of fuel shortages red diesel would also be in short supply!

No it wouldn't because it would have been delivered by rail and not by road tanker and yes we were given permission to use red diesel in railway owned vehicles if needed.

 

[dysonsphere]

Most companies who use red diesel tend to keep large bulk storage on their site due to the problems of buying small amounts of red. However I do know of a few garages around the country who keep it on a forecourt pump. (for some reason they are not HM Revenue and Customs most popular people).

 

[sheff'd victoria]

Ahh yes... I believe first bus in South Yorkshire do this. Then one day they announced the third fare hike in a year and put it down to fuel price rises when in fact it had gone DOWN for a few months. Unfortunately they paid HIGH in advance so it can work both ways.

Last South Yorkshire Buses also blamed Sheffield's hills as another reason why the fares had to go up, yet Stagecoach who for some funny reason also have to travel up and down those same hills keep their fares reasonable :roll:

That is why just like the railway the only way forward is electrification I.e the tram