Steps you can take to minimise the impact of the April duty changes
Discover your optionsUnderstanding how the red diesel changes affect you
More about changing fuel duty
What is red diesel?
Otherwise known as gas oil or tractor diesel, red diesel is intended to be used in non-road mobile machinery and is taxed at a lower rate to road diesel. There are strict restrictions on when red diesel can be used, and these limits increased significantly on 1st April 2022. Many businesses have been impacted.
Why have the rules changed?
These duty changes are part of the government’s aim to bring the UK’s greenhouse gas emissions to net zero by 2050 – a target that is set in law. The changes are also intended to support another of the government’s objectives to cut air pollution to save lives.
Red diesel makes up around 15% of all diesel use in the UK and is responsible for producing 14 million tonnes of CO2 a year. Reducing the entitlement to red diesel is a way to incentivise businesses to scale down their diesel usage altogether.
If your business has its own net zero targets, we can help you reach them with a tailored a four-step sustainability plan. With the help of World Kinect Energy Services, we will create a strategy to reduce your carbon footprint, achieve carbon compliance, reduce your energy use, source renewable energy and offset remaining carbon emissions.
How will the red diesel changes affect businesses?
If your business is losing its entitlement, you will face significant cost increases. White diesel duty currently attracts a fuel duty rate of 52.95 pence per litre – 42.77 pence per litre higher than the duty rate of red diesel.
From 1st April 2022, it became illegal to put rebated fuel into your vehicles, vessels, machines or appliances that are not allowed to use it. There are steps you can take now to mitigate the impacts of the duty increases.
The rebated fuels affected by the changes include:
Some businesses can continue using rebated fuel, but for very specific purposes. These businesses include those in:
Switching to Furnaceflame
Furnaceflame isn’t affected by the duty changes, so consider using it for commercial heating applications.
Find out moreProtecting your budget
If your budget is impacted, we can give you more price certainty with our risk management solutions.
Find out moreSafe, secure storage
We can audit your storage set-up and advise you on maintenance and security to protect your fuel.
Speak to an expertStreamlining your entire spend
To ease the impact of cost increases, our experts can assess your energy bills to identify potential savings.
Request an auditReaching sustainability targets
Using our specialist knowledge, we can help you measure and reduce the carbon impact of your fuel use.
Find out moreThe demand for organisations to become carbon neutral is increasing, and these new changes will put more pressure on businesses to change the way they operate to reach net zero.
Our sustainability experts can help you progress on your targets. Through choosing the right lubricants for your vehicles and proper fleet care, you can improve your fuel efficiency. Our colleagues at World Kinect Energy Services can give you tailored energy efficiency tips, which can also help you cut costs.
When you switch fuels, it is the ideal time to consider lower-carbon alternatives, such as HVO.
Although subject to the duty changes, alternative fuels can deliver the efficiency benefits of improved performance, better cold weather properties and low sulphur combustion.
Red diesel is another name for gas oil or agricultural diesel. It is typically used in off-road transport, power generation and for some commercial heating or burning appliances. Because red diesel attracts a lower duty rate, there are restrictions on when it can be used. It is dyed red so that the authorities can spot illegal usage, hence the name, red diesel.
Red diesel is a rebated fuel, meaning it is entitled to a rebate of 42.77ppl. Under the new rules, red diesel duty hasn’t changed. Instead, there are significantly more restrictions on the purposes for which it can be used. This means that lots of businesses must now use a white diesel or an alternative fuel, which attracts the full rate of duty. The current duty rate of white diesel is 52.95 pence per litre – 42.77 pence per litre higher than the rebated duty rate of red diesel.
No, red diesel will still be produced and permitted for select purposes. However, the purposes are being further restricted to force most businesses to choose an alternative.
More information on who will be able to continue can be found on the government website.
Yes, the new duty rules also extend to biofuels. You will only be able to use rebated biofuel for very specific purposes.
The government passed laws in 2019 to commit to reaching net zero emissions by 2050. These new rules are part of a strategy to meet this target. The aim is to incentivise businesses to reduce diesel usage.
There are a handful of industries that can continue to use red diesel, such as agriculture, amateur sports clubs, commercial boating and more.
However, even within select sectors, there are specific rules on when it can and cannot be used.
All businesses that use red diesel should look into whether they need to switch to white diesel and how to comply with the rules. If in doubt, contact our experts.