In the March 2021 budget, the Government announced forthcoming changes to Red Diesel taxation, with plans to withdraw tax relief for Red Diesel for several sectors and user groups. Here’s a short overview of the changes and the potential implications for your business.
Most machines, vehicles and appliances will lose their eligibility to use rebated (red) diesel and rebated biofuels from 1st April 2022. Instead, rebated fuel use will be limited to certain vehicles, vessels, machines, and appliances when used for specific purposes such as those used in agriculture, horticulture, forestry, and fish farming.
If you are no longer able to use rebated fuel, you should plan to run down the fuel in your vehicles, machines or appliances to as close to nil as reasonably practicable before 1st April 2022. Vehicles, machines or appliances found running on rebated fuel unlawfully are liable to seizure. HMRC officers will have the discretion not to seize if the user can satisfy HMRC, through invoices/receipts, that they did not put rebated fuel into the fuel tanks after the rules changed.
Large fuel infrastructures which cannot use their stock prior to April 2020 should have their stored fuel uplifted and safely removed from site. Whilst it is not compulsory for fuel users to have fuel tanks cleaned and pipework flushed prior to new product entering the tanks, it is best practice to do so. The new fuel should be white diesel or a synthetic diesel alternative which vastly reduces emissions.
The following industries will no longer be permitted to use RED Diesel as a rebated fuel from 1st April 2022: