At Oilfast UK, we understand the importance of staying up-to-date with the latest developments in the fuel industry. That’s why we’re here to provide a comprehensive guide to the current state of red diesel in the UK. From the recent legislative changes to the impact on businesses and the utilisation of remaining stocks, we’ve got you covered. Read on to find out more.
Changes that Affect You
As of April 1, 2022, significant changes were implemented in UK legislation, directly impacting individuals and businesses that rely on red diesel, also known as rebated fuel, gas oil, or tractor diesel. These changes required a shift to white diesel, which comes with the full Fuel Duty rate, making it a more expensive alternative.
Impact on the Tax Rebated Fuel Scheme:
Red diesel and rebated biodiesel have long been widely used in non-road vehicles and premises where power and heat generation are essential. To support industries like Agriculture and NHS that heavily rely on these fuels, the government introduced tax breaks in the form of rebates, reducing the overall cost. However, in March 2021, the government announced the removal of these rebates for many industries, effective from April 1, 2022.
The Main Changes:
The critical alteration to the rebated fuel scheme is that commercial businesses can no longer use red diesel and rebated biodiesel for heating or power generation purposes. However, it’s important to note that these fuels can still be utilised in non-commercial premises, including hospitals, agricultural facilities, and places of worship.
Impact on Your Business:
For commercial businesses that previously relied on red diesel, the main impact comes from increased costs. Sectors such as construction and manufacturing will now need to switch to white diesel, which incurs a standard, non-rebated fuel duty, leading to higher expenses.
Utilisation of Remaining Stocks
Generators for Standby or Emergency Use – Yes!
Businesses that still have stocks of red diesel allocated for generators can continue using them after the changes. We have received confirmation from HMRC that their officers will not seize these stocks if businesses can provide evidence demonstrating that they have not accumulated or introduced red diesel into the fuel system following the rule change.
The government recognises that certain users, such as data centres that rely on their stock for emergency generator use, may have limited consumption, perhaps only a few hours per year. As long as these businesses can prove that their last purchase of red diesel occurred before the tax change, their remaining stock will not be subject to seizure.
Our Advice: Retaining receipts for the product purchased before the change and white diesel purchased afterwards is crucial. These receipts will serve as essential evidence to support compliance with the regulations.
Non-Generator Stocks – No!
For stocks unrelated to generators, such as those intended for vehicles or shunters, businesses can no longer use red diesel or rebated biodiesel. By this point, such stocks should have been disposed of. It’s important to note that businesses retaining stocks that should have been disposed of may face appropriate action from HMRC, including stock seizure.
Any Further Action Required?
Initially, government guidance recommended that businesses using red diesel should have a full tank and conduct equipment cleaning to eliminate any traces of red diesel from their installations. However, this requirement has been eliminated following a consultation process.
However, it is crucial to remember that HMRC officers will inspect for red diesel or rebated biodiesel traces. They will consider factors such as the type of machinery and frequency of use to assess compliance with the new regulations and determine if any breaches have occurred.
Contact Oilfast UK Today
If you still have questions or uncertainties regarding the purchase or use of red diesel, feel free to contact the experts at Oilfast UK. We are here to guide you through the new rules and provide you with the information and assistance you need to navigate the current state of red diesel