Red Diesel Tax is changing on the 01 April 2022
Red Diesel Tax Change
What is the Red Diesel tax change?
On 01 April 2022, the government is changed who can use rebated Gas Oil (Red Diesel). These changes will mean that most users of Red Diesel will have to pay an increased Red Diesel tax rate on their fuel by using road diesel instead.
Why will there be a Red Diesel tax increase?
In June 2019, the UK passed new laws to end its contribution to global warming by 2050, thus committing to reducing our emissions to net zero. To hit this 2050 goal, the government is reforming the “Red Diesel and other rebated fuels entitlement”. This change will affect businesses and individuals who are currently entitled to supply or use rebated Gas Oil (Red Diesel) and rebated biofuels.
The government identified that Red Diesel is responsible for the production of nearly 14 million tonnes of carbon dioxide a year and as such has legislated to reduce the use of Red Diesel significantly. Red Diesel is used mainly for off-road purposes, such as to power bulldozers and cranes used in the construction industry, or to power drills for oil extraction.
The government believes that this Red Diesel tax change will incentivise Red Diesel users to switch to more energy-efficient technologies, use greener alternatives, or use less fuel.
What industries will be able to use Red Diesel from 01 April 2022?
The below is a general guide of industries that will be able continue using Red Diesel from 1st April 2022:
- 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 and 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.
Alternatively, you can speak to HMRC.
IMPORTANT: Industries that won't be able to use Red Diesel from 01 April 2022
The below is a general guide of industries that won’t be able to purchase or use Red Diesel from 01 April 2022. You will be free to switch to White Diesel or seek alternative fuels. If you require confirmation, please contact HMRC directly.
- 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)
What does the Red Diesel tax change mean for you?
Significant increase in price
The change in Red Diesel tax rate means that the costs for affected businesses will rise. Derv intended for use in diesel engine road vehicles, otherwise known as ‘White Diesel’ (because it has no marker or dye), has a fuel duty rate of 57.95 pence per litre (ppl). Red Diesel, on the other hand, is entitled to a rebate of 46.81 ppl, giving it an effective duty rate of 11.14 ppl. This means for industries/sectors that are not on the approved list, the cost to run your vehicles or engines is going to increase significantly by 48.81 ppl on 01 April 2022.
Red Diesel Tax Increase in Numbers
With White Diesel, you also pay standard rate VAT at 20%.
|
Annual usage per year |
Cost increase per year due to Red Diesel tax change |
|
5000 litres |
£2340.50 |
|
10,000 litres |
£4681 |
|
100,000 litres |
£46,810 |
|
500,000 litres |
£234,050 |
What if you get it wrong?
Identifying Illegal Use
Red Diesel contains a red dye that is added to the fuel so that it can stain the interior of engines, tanks and the pipeworks. This allows HMRC to track and monitor the illegal use of Red Diesel.
Penalties
HMRC will be entitled to charge you an estimated value of the duty that you should have paid, impose fines/penalties and seize your vehicles or equipment.
What should you do about the Red Diesel tax change?
Whilst the government has not provided official guidance to firms on how they transition from Red to White Diesel, they have asked that users do not flush out their old fuel from their tanks and systems to avoid creating accidental environmental damage.
We advise that you take the following next steps:
- Confirm whether you will be able to use Red Diesel in future
Read the Red Diesel entitlements or call HMRC.
Reform of Red Diesel entitlements
- Talk to your local Area Manager to discuss your plans
We’ll discuss running down stocks or switching to an alternative solution
Call your local area manager
- Keep records of your diesel transactions
If you sell or buy Red Diesel before the deadline, keep records. Don’t stockpile ahead of the deadline.
Alternative fuel solutions after Red Diesel tax increase
SuperHeat35
SuperHeat35 has been developed to offer conventional Gas Oil users a high quality, low cost alternative fuel to meet their heating needs.
It offers a significant savings over Gas Oil whilst providing equivalent calorific value, density and viscosity parameters. It can be used across a wide range of burner applications such as small package boilers, grain dryers, warm air heaters or rotary dryers used in mineral processing.
Call your account manager to discuss SuperHeat35.
Benefits of SuperHeat35
- High quality, low cost alternative product to Gas Oil, offering a comparative 8-10% saving
- Equivalent calorific value to Gas Oil
- Improves burner output performance
- Compatible as a drop in solution with your existing Gas Oil
- Certified to British Standard BS2869:2010
- A1:2011 by UKAS accredited laboratories
- Stored in dedicated tanks at HMRC approved warehouse
Go Green with HVO
HVO Renewable Diesel is a fossil-free diesel product made of 100% renewable raw materials, which does not release any new carbon dioxide into the atmosphere.
HVO is a drop-in alternative to fossil diesel, meeting EN 15940 standards and Fuel Quality Directive 2009/30/EC Annex II. There is no need to modify existing infrastructure - HVO is a greener renewable fuel with a chemical structure almost identical to regular diesel.
It has been certified as a sustainable fuel by the International Sustainability and Carbon Certification (ISCC) offering net greenhouse gas CO2 reductions of up to 90%. It is also a non-toxic and non-carcinogenic.
Benefits of HVO
- HVO Diesel is the premium fossil-free alternative to Red Diesel/Gas Oil which is made up of 100% renewable raw materials
- FOSSIL FREE – a renewable and sustainable fuel
- Up to 90% lower greenhouse gas emissions
- Can be mixed with regular diesel
- Superior cold weather performance, down to -32 degrees
- Excellent storage features – does not lose quality
- Odourless
- Carbon offset delivery mileage
- High flashpoint - improved safety, storage and handling
Rix Petroleum are here to help you through this Red Diesel tax change
Rix are experienced in helping customers navigate the changing rules and regulations around using fuels. We understand this Red Diesel tax rate change can be daunting which is why our dedicated team of local account managers are on hand to guide you and help you make the best decisions for your business or operation. Please get in touch if you’d like to speak with our team.
IMPORTANT!! Industries that won’t be able to use Red Diesel from 01 April 2022
You must not purchase and use Red Diesel from this date forward. You will be free to switch to White Diesel or you can seek alternative fuels. This is a general guide of the industries that won’t be able to use Red Diesel. If you require confirmation, please contact HMRC office directly.
- 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)
What will this change mean for those industries that are now not allowed to use Red Diesel?
Significant increase in price
Derv intended for use in diesel engine road vehicles, otherwise known as ‘White Diesel’ (because it has no marker or dye), has a fuel duty rate of 57.95 pence per litre (ppl). Red Diesel is entitled to a rebate of 46.81ppl, giving it an effective duty rate of 11.14ppl. This means for industries/sectors that are not on the approved list, the cost to run your vehicles/engines is going to increase significantly on the 01 April 2022 by 48.81ppl.
Annual usage per year Cost increase per year
- 5,000 litres £2340.5
- 10,000 litres £4681
- 100,000 litres £46,810
- 500,000 litres £234,050
On White Diesel, you also pay standard rate VAT at 20%.
What if I get it wrong?
Penalties:
The HMRC will be entitled to charge you an estimated value of the duty that you should have paid, impose fines/penalties and seize your vehicles or equipment.
Next Steps
Red Diesel contains a red dye that is added to the fuel so that it can stain the interior of engines, tanks and the pipework. This allows the HMRC to track and monitor the illegal use of Red Diesel. Whilst the Government has not provided official guidance to firms on how they transition from Red to White Diesel, they have asked that users do not flush out their old fuel from their tanks and systems in order to avoid creating accidental environmental damage.
What we advise you should to do next:
Do you use Red Diesel for heating then
switch to Superheat35
SuperHeat35 has been developed to offer conventional Gas Oil users a high quality, low cost alternative fuel to meet their heating needs.
It offers a significant savings over Gas Oil whilst providing equivalent calorific value, density and viscosity parameters. It can be used across a wide range of burner applications such as small package boilers, grain dryers, warm air heaters or rotary dryers used in mineral processing.
SUPERHEAT35
What are the benefits to switching Superheat35?
- High quality, low cost alternative product to GasOil, offering a comparative 8-10% saving
- Equivalent calorific value to gas oil
- Improves burner output performance
- Compatible as a drop in solution with your existing Gas Oil
- Certified to British Standard BS2869:2010
- A1:2011 by UKAS accredited laboratories
- Stored in dedicated tanks at HMRC approved warehouse
Consider going green and switch to HVO
HVO Renewable Diesel is a fossil-free diesel product made of 100% renewable raw materials, which does not release any new carbon dioxide into the atmosphere.
HVO is a drop-in alternative to fossil diesel, meeting EN 15940 standards and Fuel Quality Directive 2009/30/EC Annex II. There is no need to modify existing infrastructure. HVO is a greener renewable fuel with a chemical structure almost identical to regular diesel.
It has been certified as a sustainable fuel by the International Sustainability and Carbon Certification (ISCC) offering net greenhouse gas CO2reductions of up to 90%. It is also a non-toxic and non-carcinogenic.
Call you account manager about our HVO trials.
HVO Renewable Diesel
What are the benefits of HVO?
- HVO Diesel is the premium fossil-free alternative to Red Diesel/ gas oil which is made up of 100% renewable raw materials.
- FOSSIL FREE – a renewable and sustainable fuel
- Up to 90% lower greenhouse gas emissions
- Can be mixed with regular diesel
- Superior cold weather performance, down to -32 degrees
- Excellent storage features – does not lose quality
- Odourless
- Carbon offset delivery mileage
- High flashpoint - improved safety, storage and handling
Rix Petroleum are here to help you through this transition period
Rix are experienced in helping customers navigate the changing rules/regulations around using fuels. Thus, during this change period our dedicated team of local account managers are on hand to guide and help you make the best decisions for your business/operation.
