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Wed February 28 2024

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Red diesel ruling: no grace period for finishing reserves

4 Mar 21 Users of red diesel will not be allowed to use up old stock after the tax rebate expires on 1st April 2022, the Treasury has decided.

No red diesel for construction after April 2022
No red diesel for construction after April 2022

The budget statement this week was accompanied by publication of the Treasury’s response to the consultation that it held on the red diesel tax rebate last year.

Users of off-highway machinery currently pay just fuel duty of just 11.14p per litre. Their state-subsidised diesel is dyed red to distinguish it from the regular diesel on which road users pay duty of nearly 58p per litre (on top of the retail price).

At the 2020 budget 2020, the government announced that it intended to remove the entitlement to red diesel and rebated biofuels from April 2022, excepting use in agriculture and rail vehicles.

After consultations, more exemptions have been added: travelling funfairs and circuses, amateur sports clubs, fishing and water freight vessels, and golf clubs.

Construction, however, is still losing access to the discounted fuel on 1st April 2022.

The government said this week that not only will those losing the rebate not be allowed to buy red diesel on or after 1st April 2022, they will not be able to use any. Storage tanks must be emptied and flushed out ahead of the deadline so that enforcement inspectors can clearly tell the difference between illegal red diesel and standard ‘white’ diesel.

Vehicle and machinery with red diesel already in their tanks on 1st April 2022 will not have to be flushed out – they can be used – but any red diesel put into machines after that date will be liable for forfeiture and penalties.

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