Preferential Tax Regimes for Biofuels

A reduced excise duty rate was introduced for biodiesel in July 2002 and bioethanol in 2005, set at GBP 0.20 lower than the rate applicable to diesel and unleaded petrol.

Producers of bioblend and bioethanol blend also benefit from the reduced rate of excise duty, as the proportion of biodiesel or bioethanol in the blend bears the lower rate of excise duty. The duty reduction is granted automatically to any producer or importer of biodiesel or bioethanol, provided that the fuel concerned meets the specified definition of biodiesel and bioethanol. 

The current duty differential for biofuels for road use will cease from 2010 and duty will thereafter be charged at the same rate as main road fuels. Biodiesel for non-road use and biodiesel blended with gas oil are charged a rebatted rate of duty - with effect from 1 April 2009, of GBP 0.1042, and biodiesel blended with kerosene (used for heating) is not charged an excise duty.

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