UK Biodiesel Production Laws

In the UK, it is legal once duty on the fuel is paid. In the UK, drivers using waste vegetable oil have been prosecuted for failure to pay duty to Her Majesty's Revenue and Customs. The rate of taxation on SVO straight vegetable oil, PPO pure plant oil, WVO waste vegetable oil and UVO used vegetable oil was originally set at a reduced rate of 27 pence per litre, but in late 2005, HMRC started to enforce the full diesel excise rate of 47 pence per litre.

Following a review in late 2006, HM Revenue & Customs has announced changes regarding the administration and collection of excise duty of biofuels and other fuel substitutes (Veg Oil). The changes came into effect on June 30, 2007. There is no longer a requirement to register to pay duty on vegetable oil used as road fuel for those who "produce" or use less than 2,500 litres per year. For those producing over this threshold the biodiesel rate now applies.

HMRC argued that waste vegetable oil on the market from small producers did not meet the official definition of biodiesel in Section 2AA of The Hydrocarbon Oil Duties Act 1979 (HODA), and consequently was merely a fuel substitute chargeable at the normal diesel rate. Such a policy seemed to contradict the UK Government's commitments to the Kyoto Protocol and to many EU directives and had many consequences, including an attempt to make the increase retroactive, with one organization being presented with a 16000 pounds back tax bill. This change in the rate of excise duty has effectively removed any commercial incentive to use waste vegetable oil, regardless of its desirability on environmental grounds; unless waste vegetable oil can be obtained free of charge, the combined price of waste vegetable oil and taxation for its use usually exceeds the price of mineral diesel. HMRC's interpretation is being widely challenged by the waste vegetable oil industry and the UK pure Plant Oil Association (UKPPOA) has been formed to represent the interests of people using vegetable oil as fuel and to lobby parliament.