Further guidance on red diesel rule changes

29 March 2022

Farm business
A farm vehicle being filled with fuel

On 1 April 2022 many who use red diesel (also known as rebated fuel) to power off-road vehicles and equipment will lose the entitlement and will have to move over to white diesel. On this page we take you through the details of when and how you will be permitted to use red diesel from 1 April.

What is red diesel?

Red diesel is fuel intended for use by vehicles and machines other than road going vehicles with a reduced (also called ‘rebated’) rate of duty. The standard rate of duty for fuel used by road going vehicles is 52.95 pence per litre (ppl). The rebated rate is 10.18 ppl – a difference of 42.77 ppl.

To help ensure that rebated fuel is only used for permitted purposes it is marked with a red dye and other chemical indicators. This is why we call rebated fuel red diesel and fuel intended for road going vehicles with duty charged at the standard rate white diesel.

Rebated value

Historically, fuel for off-road vehicles has been taxed at a lower rate because fuel duty was intended to be a tax on road vehicles. The value of the rebate awarded to fuel intended for off-road use of vehicles and machines has varied over time from 100% of the standard rate to the present time where the rebated rate is 20% of the standard rate.

How is the law changing?

The current law is that red diesel can be used in any machine which is not a road vehicle. From 1 April 2022 the law will change so that rebated fuel use is limited to certain types of vehicles, machines, and appliances when the fuel is used for specific purposes only.

This means that most sectors that currently use red diesel for off-road purposes will lose the entitlement and will have to use white diesel with duty charged at the standard rate.

For example, the construction sector will lose the entitlement to use red diesel to fuel bulldozers and other equipment used on building sites and will have to use white diesel charged at the standard duty rate. Continued use of red diesel from 1 April 2022 will be permitted for specified vehicles and machines used for a limited number of specified purposes only.

Read on for details of when and how you will be permitted to use red diesel from 1 April 2022.

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