Upcoming red diesel tax changes

Duty changes for red diesel

In March 2020 the government announced it is removing the red diesel tax entitlement for many sectors, here’s a short overview of the upcoming duty changes and the potential implications for your business.

The new legislation (and penalties) are set to start from April 2022, which means red diesel users have a limited time to get set up and be ready.

The sectors that were said to remain eligible for red diesel use would be:

  • Agriculture, horticulture, fish farming, forestry
  • Railways
  • Non-commercial heating systems, such as off-the-grid homes, places of worship and non-propulsion uses on permanently moored houseboats.
  • Fishing and water freight
  • Travelling funfairs and circuses
  • Amateur sports clubs
  • Golf courses
  • Non-commercial power generation

You can find out more about qualifying applications here

This means those industries not included in the above list will have to use fuel that’s taxed at the standard rate for white diesel.

The government is also extending fuel duty to biodiesel, biofuels and fuel substitutes intended for heating, employing the rebated duty rate to non-commercial heating and the full rate of duty to commercial heating.

HMRC will also be authorised to disapply its powers to seize vehicles or other machinery in specific cases.

Customers should also be aware that other fuels that are currently subject to duty rebates for certain applications, such as kerosene and fuel oil, are also currently under government review. Any further changes will be communicated when confirmed.

Red Diesel Tanks after April 2022

The government has also announced that it proposes to mandate that registered fuel suppliers switching a fuel tank from red to white diesel must flush out the tank and supply lines to ensure no trace of marked fuel remains. This is to ensure compliance and reduce the risk of white diesel being contaminated with the red diesel marker.

Red diesel users that will lose their red diesel entitlement and must not purchase red diesel after 1 April 2022 and use up existing stocks beforehand.

How can Mitchell and Webber help your business?

We have set up a specialist team to help remediate any issues such as preliminary site works, fuel sampling, fuel pump outs and tank cleaning. Contact us for more information on how we can keep your site within compliance and avoid penalties.

If you would like to learn more or have any questions. Get in touch with our red diesel experts by calling us on 01209 821676 to find out more about how we can help your business.

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