Guidance on the use of Rebated diesel (red diesel) in classic and historic agricultural equipment
Published: 10/03/2022
The Government has announced changes in the use of rebated red diesel (dyed gasoil) from April 2022. https://www.gov.uk/government/publications/reform-of-red-diesel-entitlements/reform-of-red-diesel-and-other-rebated-fuels-entitlement
Historically red diesel is diesel used mainly for off-road purposes, such as agriculture, forestry, fisheries, rail, construction industry, or to power drills for oil extraction. Government figures show that it accounts for around 15% of all the diesel used in the UK and is responsible for the production of nearly 14 million tonnes of carbon dioxide a year. Red diesel used in the construction and infrastructure building sectors was also estimated to have caused 7% of nitrogen oxide emissions and 8% of PM10 emissions (a type of fine particulate matter) in London in 2018.?
From April 2022 the use of red diesel has been limited to the following purposes:
- 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 non-commercial premises - this includes the heating of homes and buildings such as places of worship, hospitals and townhalls; off-grid power generation; and non-propulsion uses on permanently-moored houseboats
- for maintaining community amateur sports clubs as well as golf courses (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 (including caravans) of travelling fairs and circuses
The measure will also extend fuel duty to biodiesel, bioblends and fuel substitutes used in heating, applying the rebated duty rate to non-commercial heating and the full rate of duty to commercial heating.
The Government has also recently added further clarification of these measures in an answer to a parliamentary question on 22 February 2022, that:
“The Chancellor confirmed at Spring Budget 2021 that the Government will remove the entitlement to use red diesel from most sectors from April 2022, other than for agriculture and a limited number of other users. This will help to ensure fairness between the different users of diesel fuels and that the tax system incentivises the development and adoption of greener alternative technologies.
Agricultural vehicles will be entitled to run on rebated fuel after April 2022 for purposes relating to agriculture, horticulture, forestry and fish farming. They will also be able to use rebated fuel when cutting verges and hedges that border a road, clearing snow, gritting, and clearing or otherwise dealing with flooding.
The activities accepted as falling within the definition of agriculture, horticulture and forestry are defined in HMRC Excise Notice 75. As agricultural shows and ploughing matches provide information and education that benefits agricultural purposes, the Government considers that running or participating in these activities are purposes relating to agriculture, for which rebated fuel may be used in qualifying vehicles and machines, and will be updating Excise Notice 75 accordingly. Rebated fuel can also be used to travel to and from where the vehicles or machines are to be used for these activities”.
Red diesel can therefore continue to be used in vehicles participating in ploughing matches and agricultural shows and travelling on the road to these events as they are deemed as benefitting agriculture. This clarification by the Government does not extend to charity tractor road runs where road (white) diesel must be used.
The legislation for kerosene remains unchanged.
It should be noted that red diesel is not only dyed red but also contains several invisible chemical markers that can be measured at low levels of dilution. It is therefore important to make sure that any bulk storage tanks and vehicles/machinery switched to operating on road (white) diesel have their fuel tanks and fuel systems thoroughly flushed to ensure there are no remaining traces of the red rebated diesel.
