“They must be running on red diesel”

Red diesel is currently around 47p/litre plus VAT, in bulk. You can’t claim the VAT back (obviously) so that’s 55p/litre. You won’t be able to offset that 55p/litre against tax so that pushes the effective price up to 70p/litre. Pump price for normal diesel is currently around 89p/litre plus VAT.

At 30 mpg your fuel cost per mile covered will be 13.5p on normal diesel and 10.5p or red.

I somehow don’t think that a cost differential of 3p/mile could account for a 50% price differential in the other courier’s rate. They’re just operating to a different business model to you.

Posted under Uncategorized

Posted by Alec at 11:52 am, November 9, 2007

2 Comments so far

  1. I don’t follow that Mick; how does a 25p/l rise mean that the government have made an extra 16.25p/l tax? I make it 5.72p including the 2p duty increase.

  2. It doesn’t work like that Mick. Duty on fuel is a fixed rate, currently 50.35p, on top of that there’s VAT on the whole cost of the fuel – 15.64p on a £1.05 litre.

    So at £1.05/litre the total tax take (assuming that the purchaser isn’t VAT registered) is 65.99p or 62.85%. When the price hits £1.25/litre in January the tax take will be ‘only’ 55.18% or 68.97p/litre.

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