Adapting your business to the red diesel duty changes

What has changed?

What has changed?

Most machines and vehicles are no longer able to use rebated fuels.

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Adjusting to the changes

Adjusting to the changes

Steps you can take to minimise the impact of the April duty changes

Discover your options
Frequently Asked Questions

Frequently Asked Questions

Understanding how the red diesel changes affect you

More about changing fuel duty
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More restrictions on rebated fuel usage

What has changed?

From 1st April 2022, most businesses that previously used rebated (red) diesel and biofuels are no longer allowed to do so. By that date, they needed to switch to white diesel or biofuels, which carry the full rate of 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.

 

Adapting to the changes takes time. We encourage our customers to speak to us now so we can help you find ways to reduce the impact of additional costs.

 

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Industry impact

Which businesses do the changes affect?

Every business in every sector should look into how their operations will be impacted because the new rules are wide reaching.

The rebated fuels affected by the changes include:

  • Red diesel
  • Hydrotreated vegetable oil (HVO)
  • Biodiesel and bioblend
  • Fuel substitutes

Some businesses can continue using rebated fuel, but for very specific purposes. These businesses include those in:

  • Agriculture, horticulture, fish farming and forestry sectors
  • Vehicles used on railways
  • Electricity generation and heating for non-commercial premises
  • Registered community amateur sports clubs (CASCs), golf courses and driving ranges
  • Sailing, boating and marine transport
  • Travelling fairs and circuses
If your business falls within one of these categories, you should visit the government website to make sure you’re familiar with the specific requirements for using rebated fuel.
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Solutions to help you switch in the most efficient way

Switching to Furnaceflame

Switching to Furnaceflame

Furnaceflame isn’t affected by the duty changes, so consider using it for commercial heating applications.

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Protecting your budget

Protecting your budget

If your budget is impacted, we can give you more price certainty with our risk management solutions.

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Safe, secure storage

Safe, secure storage

We can audit your storage set-up and advise you on maintenance and security to protect your fuel.

Speak to an expert
Streamlining your entire spend

Streamlining your entire spend

To ease the impact of cost increases, our experts can assess your energy bills to identify potential savings.

Request an audit
Reaching sustainability targets

Reaching sustainability targets

Using our specialist knowledge, we can help you measure and reduce the carbon impact of your fuel use.

Find out more
World Kinect Energy Services

Consider your transition

The 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.

 

We’re here to support your business, through the red diesel duty changes and towards a sustainable future. Get in touch with our experts to find out more.

 

FAQs

Frequently Asked Questions

What is red diesel?

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.

How has red diesel duty changed?

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.

Is red diesel being scrapped?

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.

Is the duty on biofuel changing?

Yes, the new duty rules also extend to biofuels. You will only be able to use rebated biofuel for very specific purposes.

When did red diesel duty change?
During the 2020 Budget, the government announced the duty changes that came into effect on 1st April 2022. By that date, all affected vehicles and machinery will need to have switched to non-rebated fuel.
Why has red diesel duty changed?

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.

What sectors are still eligible to use red diesel from April 2022?

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.

Get in touch

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