HMRC and 2500 litre duty free allowance

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This page is intended as guidance only, and as such the site disclaimer applies - use this information at your own risk. Please check with the EA and HMRC directly for the current regulations.

The latest legislation is HMRC 179e updated 21st December 2021 section 4.2.1.

HMRC provide an annual 2500 litre duty free production allowance for bio derived fuels. Download full pdf document here

This production allowance is per-premises, so you can't processor share unless the total amount produced in any 12 month period is less than 2500 litres. You also can't buy bio road fuel without duty and set it against your 2500L production allowance.

You can buy bio heating oil and set that against your 2500L allowance for road fuel, but if the producer suspects you will use it as road fuel he must charge the road fuel duty(if he produces over 2500L/12 months)

Buying new cooking oil and using it as a road fuel is counted as production and should be counted in your records.

Homebrewers should keep basic records detailing production for the last 6 years, i.e. date and qty of production, but aren't required to register with the HMRC unless the quantity produced exceeds or is predicted to exceed the allowance.

If the allowance is exceeded, duty is liable for all the fuel produced (including the 2500 litres under the limit).

Records should be checked at the end of each month for the amount used in the previous 12 months, if you have exceeded 2500L or suspect you will exceed it in the next 12 months you are required to register.

The current rates of duty are listed here.

Are there ways around the 2500 litre per year limit?

The categorical answer is NO.

Many people try to dream up ways of sharing processors, but the 2500 litre limit is quite clear and has been concisely summarised by Maurice_Mynah as follows:

If several people start up a syndicate or co-operative, the 2500 litres 'duty free limit' is shared between those people. The limit is applicable to the property or the equipment, whichever is the lesser.

  • A processor in a persons shed. Limit for that processor ........................................ 2500 litres.
  • Two processors in that shed. Limit for that shed ................................................... 2500 litres.
  • A person owns two procesors on two pieces of land. Limit for that person ............... 2500 litres.
  • A syndicate which owns a trailer with a processor on it. Limit for the syndicate ....... 2500 litres.

From this you will get the idea that the Government is intent on supporting the idea that one man in one shed with one processor can make up to 2500 litres of road fuel.

Nothing else is allowed.