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Upcoming HMRC changes to red diesel

In the March 2021 budget, the Government confirmed forthcoming changes to red diesel taxation. From 1st April 2022, rebated diesel (known as red diesel) and rebated biofuels will no longer be allowed to be used as they are currently.


Also known as gas oil, off-road diesel or tractor diesel, red-diesel is a fuel intended to operate registered off-road vehicles and machinery and is therefore taxed at a lower rate. Due to the rebated duty rate, they are legal requirements about when and how it can be used, which is why it is dyed red to help identify illegal use.


From the 1st of April 2022 onwards, fuel distributors will only be able to supply red diesel for the following applications:

  • for vehicles and machinery used in agriculture, horticulture, fish farming and forestry. This includes allowing vehicles used for agriculture to be used for cutting verges and hedges, snow clearance and gritting roads
  • to propel passenger, freight or maintenance vehicles designed to run on rail tracks
  • for heating and electricity generation in premises used for non-commercial purposes. This includes: the heating of homes and buildings such as places of worship, hospitals and town halls; and electricity generation for homes and other premises being used for non-commercial purposes
  • for maintaining golf courses and community amateur sports clubs (including activities such as ground maintenance, and the heating and lighting of clubhouses, changing rooms etc)
  • as fuel for all marine craft refuelling and operating in the UK (including fishing and water freight industries), except for propelling private pleasure craft in Northern Ireland
  • for powering the machinery of travelling fairs and travelling circuses (including providing heat and electricity for caravans used by them)


The exact implications this will have on your business depends on your industry and which application you are using red diesel for. If you are included in the above list of qualifying uses, you don’t need to worry. You can still continue to order red diesel after the changes are in place.

Sectors and applications that don’t fall into the above categories – which includes construction and manufacturing customers, as well as a number of transport and logistics use – will no longer be able to purchase or use red diesel from 1st April 2022. For these businesses, the new changes will mean significant cost increases by switching to regular white diesel, also known as DERV.

Government advice is that users of vehicles and machinery losing their red diesel eligibility must ensure they run down their existing stocks before 1st April 2022. There will be no “grace period” to allow businesses to use up their remaining red diesel past this date. The government has implied the likelihood of on-site spot checks and fines issued for non-compliance.

Users may also have to flush out their existing tank when switching to white diesel leaving no trace of rebated fuel by the change date.

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