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New rules for Red Diesel users

Changes to Red Diesel Entitlement

Gas Oil & Red Diesel duty changes

With effect from the 1st April 2022 new government rules on the Tax relief and permitted use of Red Diesel & Gas oil have changed.

These changes now mean that many sectors that previously used Gas Oil & Red Diesel will no longer receive tax relief and are now required to switch to an alternative fuel such as white diesel (DERV), or a greener product HVO. Commercial consumers previously using Gas Oil / red diesel for heating will also have the option of using HVO, or depending on the suitability of their heating equipment, they may be able to use Kerosene.

What is changing with the gas oil duty changes?

Effective from the 1st April 2022, many sectors now need to use an alternative to Gas Oil / red diesel, as they are now forced HMG rules to use a different fuel that is taxed at the standard rate for white diesel.

The law has changed as part of the UK Governments push to achieve a net zero emissions target by 2050. The changes are to encourage the development and usage of cleaner, more sustainable fuels and while this is a positive environmental step it does present a challenge to a wide range of sectors and businesses.

Many businesses will have assessed their usage and transition to an alternative following the gas oil/ Red Diesel duty changes, but we are aware that there are others that are unsure of whether they remain exempt or not and what the financial implications are to their business in having to switch from red to white diesel.

Who will be affected by the changes?

We are here to help with advice on some of the grey areas surrounding these changes. If you previously used Gas oil /  red diesel in machinery, generators or for commercial heating purposes in the following sectors you will have been affected by the changes.

  • Construction, mining, and quarrying
  • Manufacturing
  • Plant hire, transportation/ logistics, waste management
  • Highway maintenance
  • Airport activities
  • Ports and harbour activities

From the 1st April 2022 we are only be able to supply Gas Oil & red diesel to your business if that application is for the sole purpose of the following uses:

  • Agriculture, horticulture, forestry, and fishing
  • Flood and snow clearance including gritters
  • Propulsion of passenger, freight, and maintenance vehicles on rails
  • Propulsion of commercial boats including passenger ferries and water freight
  • The powering of machinery (including caravans) of travelling fairs and circuses
  • Non-commercial heating in homes, places of worship, NHS hospitals, townhalls and permanently moored houseboats
  • Amateur sports clubs and community sports centres, golf courses (including activities such as ground maintenance, and the heating and lighting of clubhouses, changing rooms etc.)

Changing to an alternative – what does that mean?

Up until 1st April 2022 Gas Oil & Red diesel was used by a number of industries in machinery and equipment, and made up for about  15% of the diesel that is used in the UK, and before 1st April 2022 users paid  11.14p per litre as a duty rate compared to the 57.95 ppl for white diesel and although the Duty rates were recently reduced  by 5p per litres, these sectors are now going to pay significantly more for their fuel purchases,  as they are now forced by the new rules to use White Diesel (DERV)

Failing to comply with the regulatory changes can result in heavy fines. It is therefore recommended that your business confirms that it fully understands and applies these new rules. As stated, we are happy to advise, and here below are a few things you might want to consider.

  • If you have previously stocked Gas Oil / Red Diesel for a use type that has now changed, you must ensure that you have ran your stock down before the 1st April deadline. There is no grace period after this date.
  • Retain proof of purchase for red diesel to prove that you have not stockpiled red diesel for the intended use after the 1st April
  • Check the condition and security of your tanks. Many businesses are targeted for their fuel and fuel theft is expected to increase as more switch from red to white products.

What are the alternatives following the gas oil duty change?

Once you have assessed whether your business will be affected now is the time to start planning the switch to an alternative. We have a wide range of products that are suitable replacements:

  • Standard White Diesel (Derv)
  • HVO30 – A blended drop-in replacement consisting of 30%  (HVO) and white diesel offering a cleaner alternative
  • 28 secs Kerosene – an efficient replacement fuel for commercial heating applications in boilers or burners. Kerosene is a cost-effective alternative

Please call our sales team and speak to one of our experts for more information on any of the alternative products.

More information

Gov UK – Reform of red diesel and other rebated fuels entitlement

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