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Changes to rebated red diesel from 1 April 2022 onwards
The government has announced changes to the use of rebated red diesel and biofuel from 1 April 2022 onwards. Learn more about vehicles and machinery that will need to start using white diesel.
Words by: Nimisha Jain
Published on 2 November 2021 | 0 min read
What is red diesel?
'Red Diesel' is a gas oil containing a red marker dye, used for off-road purposes such as powering non-road machines, tractors, diggers, stationary engines, heating plant and& marine vessels. The diesel fuel is dyed red to help it stand out as the rebated fuel and to easily identify when the wrong fuel is being used to prevent fuel fraud.
It makes up for 15% of total diesel used in the UK and produces nearly 14 million tonnes of CO2 per annum. Red diesel is popular because of its rebated fuel duty rate of 11.14 pence per litre (ppl), which makes it much more affordable than 'white diesel', which has a fuel duty rate of 57.95 ppl.
It makes up for 15% of total diesel used in the UK and produces nearly 14 million tonnes of CO2 per annum. Red diesel is popular because of its rebated fuel duty rate of 11.14 pence per litre (ppl), which makes it much more affordable than 'white diesel', which has a fuel duty rate of 57.95 ppl.
Policy changes to rebated red diesel and biofuel
During Budget 2020, Chancellor Rishi Sunak announced that from the 1st April 2022, most sectors will not be allowed to use ‘red diesel’ anymore, except for agriculture, horticulture, fish farming, forestry, rail and non-commercial heating system users or if the HMRC has provided you with a license to use rebated fuel.
Businesses like construction, mining and quarrying, ports, timber and steel manufacturing, leisure, road maintenance, airport operations, oil and gas extraction, and plant hire previously benefitted from the rebate. These businesses will now have to start paying standard fuel rates like road vehicle users do and plan their switch from rebated red diesel to taxed white diesel from 1 April 2022 onwards. Suppliers will also be affected by this change in rebate – they will either have to reduce the number of fuel tanks storing red diesel or flush out tanks storing red diesel to replace it with white diesel. This measure will however mean less admin work of recording information about all the customers using rebated fuel. The entitlements are being removed to meet the government’s ambitious net zero plans and help fight climate change by pushing businesses to improve the energy efficiency of their vehicle and machinery or reduce their fuel consumption, and to promote the use of greener fuels to help reduce greenhouse gas emissions. The Hydrocarbon Oil Duties Act (HODA) 1979 defines the amount of fuel duty levied on different types of fuel, penalties for misuse and the rebate available if any. HODA will be amended to reflect the changes to the rebate available on red diesel and specify the vehicles and machinery that will be exempt from these changes and the fine for disregarding the policy changes.
Businesses like construction, mining and quarrying, ports, timber and steel manufacturing, leisure, road maintenance, airport operations, oil and gas extraction, and plant hire previously benefitted from the rebate. These businesses will now have to start paying standard fuel rates like road vehicle users do and plan their switch from rebated red diesel to taxed white diesel from 1 April 2022 onwards. Suppliers will also be affected by this change in rebate – they will either have to reduce the number of fuel tanks storing red diesel or flush out tanks storing red diesel to replace it with white diesel. This measure will however mean less admin work of recording information about all the customers using rebated fuel. The entitlements are being removed to meet the government’s ambitious net zero plans and help fight climate change by pushing businesses to improve the energy efficiency of their vehicle and machinery or reduce their fuel consumption, and to promote the use of greener fuels to help reduce greenhouse gas emissions. The Hydrocarbon Oil Duties Act (HODA) 1979 defines the amount of fuel duty levied on different types of fuel, penalties for misuse and the rebate available if any. HODA will be amended to reflect the changes to the rebate available on red diesel and specify the vehicles and machinery that will be exempt from these changes and the fine for disregarding the policy changes.
Why is red diesel illegal?
It’s illegal to use red diesel in on-road vehicles, as the fuel is sold at a rebated price meant for off-road vehicles and machinery only.
From 1 April 2022 onwards, red diesel will become illegal for most off-road vehicles and machinery as well, unless specified in the HODA that it’s legal for the vehicle or machinery to use red diesel, to encourage the use of more sustainable fuel and energy-efficient ways of doing business.
From 1 April 2022 onwards, red diesel will become illegal for most off-road vehicles and machinery as well, unless specified in the HODA that it’s legal for the vehicle or machinery to use red diesel, to encourage the use of more sustainable fuel and energy-efficient ways of doing business.
What's the difference between red diesel and white diesel?
The only difference between red diesel and normal diesel used in cars is the colour – a red dye is added to the rebated fuel to help differentiate it from the taxed diesel.
This way, the HMRC can catch anyone trying to use rebated red diesel illegally. The dye is harmless and does not affect vehicles or machinery in any way.
This way, the HMRC can catch anyone trying to use rebated red diesel illegally. The dye is harmless and does not affect vehicles or machinery in any way.