Changes to red diesel tax and your business

Changes to red diesel tax and your business

If your business uses red diesel, you need to know about the Government’s plan to withdraw tax relief for a number of sectors and business groups from 1st April 2022.  Due to restrictions on which industries can use red diesel and claim a rebate, this could effectively mean a ban on using it. We want to help you find out if this will affect your business, and if it does, how we can provide great value alternatives so you can be compliant.

What is red diesel?

Also known as gas oil, off-road diesel or tractor diesel, red diesel is used in non-road vehicles, generating power, and for certain commercial heating uses. There are strict legal requirements as to where it can be used and to ensure it is used correctly, it has been dyed red to make it easy to identify.


Who can carry on using red diesel:

  • Agriculture, forestry, horticulture and fish farming. This includes agricultural vehicles used for cutting verges and hedges, snow and flooding clearance and gritting roads.
  • Vehicles designed to run on rail tracks.
  • Homes and building heating if used for other non-commercial purposes, such as places of worship and townhalls.
  • Heating (and other non-propulsion uses) on permanently-moored houseboats.
  • Commercial boats, including the fishing and inland water freight industries and passenger ferries.
  • Travelling fairgrounds and circuses where diesel is used for powering their machinery (including their caravans).
  • Non-commercial power generation, including households who rely on red diesel for electricity generation in areas not connected to the electricity grid.
  • Amateur sports clubs and golf courses, including activities such as ground maintenance as well as the heating and lighting of the clubhouse and changing rooms. Amateur sports clubs need to be registered as community amateur sports clubs (CASCs).

Who can’t carry on using red diesel

  • Construction and road maintenance.
  • Logistics and haulage (including refrigeration units).
  • Mining and quarrying.
  • Oil and gas extraction.
  • Waste management.
  • Commercial heating.
  • Leisure.
  • Airport operations and ports.
  • Manufacturing (such as ceramics, timber and steel).
Unsure if your business can continue using red diesel? Call us on 01423 770 668.


What if you don’t qualify?

If your business doesn’t qualify for red diesel tax relief then you won’t be able to buy or use red diesel from us or any other fuel supplier from 1st April 2022. This means you will need to use white diesel, an alternative form of oil or switch to LPG. In addition, you must use up all your existing supply of red diesel by 1st April 2022. You cannot use any ‘left over’ after this date. It’s worth noting that the Government has decided to give HMRC officers the ability to not seize red diesel if the user can provide evidence that they have not built up their stocks or taken red diesel into the fuel system after the rules changed. This is because they understand that some users, like data centres, can have a 3-day supply of diesel in their generator in case of emergencies, but may only use it for a few hours a year, so the last time they purchased red diesel may be some time before the tax change.


Keeping your business running

At Northern Energy, we’re here to help your business. If you’re eligible to continue using red diesel, it will be business as usual. If not, we can ensure a smooth change over to an alternative fuel. We can also offer a choice of cost-effective fuel options so you can choose the right one for your needs.


How we can help: Advice on red diesel tax changes

We can give advice and support concerning the changes to red diesel tax, if they affect your business, and if they do, what your options are.


Offer cost-effective alternatives

You don’t have to use more expensive white diesel. We can offer GO:35 which is a cost-effective alternative to commercial fuel that’s interchangeable with existing commercial gas oil boilers and heating machinery. We will also be able to provide environmentally friendly HVO (Hydrotreated Vegetable Oil) shortly which can cut your carbon dioxide emissions by up to a staggering 90%. Also, we can see if switching to LPG is an option.


Tank flushing

If you can no longer use red diesel, we can put you in touch with and OFTEC registered engineer who can flush your tank out so you can begin using white diesel or an alternative fuel option.


Want advice on red diesel tax changes and your business?

Get in touch today and we can answer all your questions as well as provide advice and support on our alternative fuels if your business can no longer use red diesel.


Call us on 01423 770 668.


Alternatively, further information can be found on the HMRC website.