UK restrictions on use of ‘red’ diesel from 1 April 2022

From this date, it will no longer be legal to use red diesel for non-road mobile machinery such as bulldozers and cranes or to power mobile generators on construction sites. Businesses should prepare for the change by running down stocks of red diesel in storage tanks and considering the cost implications of a move to ‘white’ diesel, and whether these costs can be passed to customers or contractors.

Red diesel is diesel which contains red dye and other chemical markers to indicate that it is rebated diesel and has therefore been subject to less fuel duty than normal (white) road fuel diesel. The red marker allows HM Revenue and Customs (HMRC) to check whether red diesel is being used illegally.

Red diesel attracts significantly less fuel duty than white diesel with duty of 46.81 pence per litre less for red diesel than white diesel. Red diesel is also subject to a reduced 5% rate of VAT for supplies up to 2,300 litres.

The change in law

The change is being made to help meet the government’s climate change and air quality targets.

From 1 April 2022 red diesel can only be used for the following purposes:

• 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 as well as golf courses;
• as fuel for all marine craft refuelling and operating in the UK, except for propelling private pleasure craft in Northern Ireland; or
• for powering the machinery of travelling fairs and circuses.

Preparing for the change

After 1 April 2022 red diesel may not be put into vehicles or appliances which are no longer entitled to use it. Any fuel already in the tank can continue to be used up if it was legally put into the vehicle before 1 April 2022.

Red diesel which remains in storage tanks after 1 April 2022 must be disposed of or transferred to someone who is still allowed to use it. However, tanks do not need to be flushed out.

Difficulties arise in relation to vehicles or machines which are used for both ‘allowed’ and ‘non-allowed’ purposes after the rules change. If white diesel is not used for all purposes, the tank will have to be flushed out to remove all traces of rebated fuel when switching uses. Particular care will need to be taken with hired equipment.

Traces of red diesel are likely to remain in fuel tanks for some time after the changes and HMRC may carry out spot checks. Businesses therefore need to keep evidence that any red diesel was put in before the rules changed and that the vehicle has been refilled with white diesel since 1 April 2022.

HMRC can seize vehicles and machines found to be running unlawfully on red diesel. Fines and criminal sanctions can apply to those found to be intentionally or recklessly breaching the rules.

HMRC has published guidance for fuel users on preparing for the change.