HCOTEG23250 – Law Background: UK Derogations from EC legislation

Introduction

The UK holds a number of derogations from EC legislation. These make provision for the UK to differ from the EU, in that we can apply a different rate of duty for:

• Leaded and unleaded petrol
• Local public passenger transport vehicles (amounts to rebate for all buses called the Bus Service Operators Grant [BSOG] run by the DfT)
• Water/diesel emulsion.

Excise duty: Expiry of UK derogations from the Energy Products Directive

Under the EU Energy Products Directive (EPD), the UK held derogations until 31 December 2006 to allow reduced rates of duty on:

• Fuel used by private pleasure craft
• Fuel used by private aircraft and
• waste oils* which are reused as fuel either directly after recovery of following a recycling process for waste oils, and where reuse is subject to duty.

In October 2006, the UK applied to the European Commission for these derogations to be extended. The Commission has now turned down the request from the UK (and other Member States) for renewal of the derogations for fuel used in private pleasure craft and fuel used in private aircraft.

Although the derogations for private pleasure craft and private aircraft have now lapsed, in practice there will be no immediate change, as Primary legislation will be needed to implement the new regime. Therefore until the law is changed, the current arrangements will continue to apply until November 2008.

* Please note that at the time of writing the Commission has still to take a decision regarding the waste oils derogation.