FMJ.CO.UK
WILL YOU FEEL THE IMPACT
OF THE CHANGES TO TAX
RELIEF ON RED DIESEL?
BY JOHN KINSTRIE, HEAD OF SOLUTIONS AT DTGEN
MONTH IN FM
MARCH 2022 49
In June 2019, the UK became the first
major economy in the world to pass laws
guaranteeing an end to its contribution to
global warming by 2050. The target will require
the UK to bring all greenhouse gas emissions to
net zero by 2050.
At Budget 2020, the government therefore
announced that it would remove the entitlement
to use red diesel and rebated biodiesel from most
sectors from April 2022 to help meet its climate
change and air quality targets. By March 2021
Budget, changes to tax relief for rebated gas oil (red
diesel) were confirmed by the Chancellor of the
Exchequer which have resulted in a withdrawal of
the tax relief for certain sectors and applications.
This new legislation comes in to force on 1st April
2022 a© er which point red diesel will only be
supplied for a limited list of applications.
The implication of this change in legislation will
depend on your industry and use of the fuel. It will
a— ect, for example, businesses in construction,
mining and quarrying, ports, manufacturing (e.g.
ceramics, steel, timber), haulage (for transport
refrigeration units on lorries), road maintenance,
airport operations, oil and gas extraction, plant hire,
logistics and waste management.
For businesses in these sectors, there will be a
significant cost increase as switching to regular
white diesel will mean they need to pay the full
duty rate which will increase the price paid from
around 60 pence per litre to 120 pence per litre. This
measure is expected to incentivise these rebated
fuel users to seek greener alternatives or simply use
less fuel.
What is red diesel? Red diesel is the name given
to diesel fuel that is used ‘o— -road’, also known as
gas oil, cherry red, or tractor diesel. As it is used for
a wide range of agricultural, plant and construction
equipment including generators, diggers,
harvesters, tractors and other o— -road machinery;
o— the public roads, it is taxed at
a lower rate. However, there are
strict requirements for when it
can be used, so it is dyed red for
identification purposes.
Due to the changes coming,
many now have questions
regarding its usage, purpose
or legality. As the rules and
regulations surrounding its use
are changing, it’s imperative that
you keep up to date so that you
remain on the right side of the
law. For individual requirements
and laws surrounding your own
usage, you can check with HMRC
here www.gov.uk/government/
publications/changes-to-rebatedfuels
entitlement-from-1-
april-2022
The Government has warned
those losing their red diesel
entitlement that there will be
no ‘grace period’ to use up old
stocks a© er April 1st 2022 arrives.
All stocks must be used up before
this date.
The aim of removing most red
diesel entitlements will help to ensure that the
tax system incentivises users of polluting fuels
such as diesel to improve the energy e— iciency of
their vehicles and machinery, to invest in cleaner
alternatives, or just use less fuel. Therefore, the tax
changes should have a positive impact on carbon
emissions and air quality.
For many of our customers, the use of power
generation equipment is not however optional, and
so we continue to find new, cleaner ways to support
the critical power needs of many industries.
Innovative gas-powered systems use natural
gas as an alternative fuel delivering the same
performance characteristics as diesel with added
benefits of reduced exhaust emissions, reduced
environmental pollution risks, and no requirement
for bulk fuel storage.
Find out more about our gas range here
https://bit.ly/3IBbEvy
www.dtgen.co.uk 0141 956 7764
/
/3IBbEvy
/www.dtgen.co.uk
