2500 litres of biofuel a year tax free

I don’t know how it evaded my attention at the time, but somehow it did. Back in June, Her Majesty’s Revenue and Customs simplified rules for producers and users of biodiesel such that if you produce (or use) less than 2500 litres per year you are exempt from fuel duty, and from the requirement to fill out monthly returns.

This translates to a potential tax saving of £708.75 (28.35p duty per litre x 2500), and makes using vegetable oil as a diesel substitute a whole lot more attractive.

Vegetable Oil as a Biofuel

My friend Jake is currently trying out a blend of 20% vegetable oil, 80% diesel in his unmodified VW Polo and has so far driven 600 miles with no side effects!

Since Vegetable oil is about £0.55 per litre (compared to over £1 a litre for diesel), even this 1:4 mix is saving him around £4 per tank.

4 thoughts on “2500 litres of biofuel a year tax free”

  1. I am currently running my Peugeot 306 Dturbo on untreated used vegetable oil with no adverse affects, in fact the car seems to be running better! The best bit is the oil is free as my local landlord allowed me to pick it up as it saves him a phine call, I just get him a pint every time I am in the pub!! Happy days ;-)

  2. Oh dear, all gone a bit tits up!! My car has a lucas fuel pump and it turns out it cant take veggie oil, but the bosch ones can! You live and learn :-(

  3. Instead of running on straight vegetable oil have you tried running on bio fuel converted from vegetable oil?

  4. If the bio fuel is sold as alkyl esters you can sell/produce more than 2500L and still pay no tax. Its just legal word play muhahaha

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