Back in 2020, the UK government announced it would be banning the use of red diesel and rebated bio-diesel in most sectors to help meet climate change and air quality targets.
Starting in April 2022, most users of red diesel will have to make the switch to fuel taxed at the standard rate for diesel, such as motorists in order to reflect the harmful impact of emissions produced.
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 current law is that red diesel can be used in any machine which is not a road vehicle, but from 1 April 2022 the law will change so that red diesel use is limited to certain types of vehicles, machines and appliances when the fuel is used for specific purposes only.
There are two key things to consider when working out if your business can use rebated fuel (red diesel)...
1. Agriculture, horticulture, fisheries and forestry have retained the use of rebated fuel. It is therefore important to be clear that any work you do is for an agricultural, horticultural, fishery or forestry purpose. This is not necessarily the same as just doing work on agricultural land. The operation you are doing must be of benefit to the land/livestock.
2. Once a legitimate use (as above) can be established it is important then to confirm that the vehicle you are intending to use is allowed to use red diesel - such vehicles can include:
- tractors
- quad bikes
- utility vehicles (John Deere Gator for example)
- commercial ride-on mowers
- tractor mowers
- golf & sports turf mowers
For a full list of vehicles, CLICK HERE
Vehicles that will be allowed to use red include agricultural and horticultural vehicles, special vehicles, unlicensed vehicles and certain machines and appliances. Please remember they must only be doing an approved operation (of benefit to land/livestock) not just working off-road as is currently allowed.
Provided contractors are doing agricultural, horticultural, fish farming or forestry work they can continue to use red diesel driving to and from the farm, carrying materials or equipment needed for the job and removing waste resulting from their work.
At the moment it is legal to use red in off-road vehicles for non-agricultural work, provided these vehicles are not driven to the job on the road (e.g. work on sports fields). Currently these machines should be transported to jobs on a low loader so would not be driven on the road on red. After 1 April 2022, such vehicles will have to switch fuel to white for non-agricultural work (even if machines are unlicensed and never driven on the roads). Agricultural jobs will still be allowed on red.
The following is a Q&A to try and help everyone get to grips with the changes.
1. What defines ‘agricultural and horticultural use’?
In simple terms agricultural use is doing work for agricultural benefit and the same goes for horticulture, read on for a more detailed explanation:
Meaning of ‘purposes relating to horticulture':
In the government's view, horticulture is the cultivation and management of gardens (including vegetable plots, allotments and market gardens, but also flowerbeds, trees, shrubberies and ornamental lawns in public parks). By cultivation and management, they mean growing and tending flowers, lawns, shrubs and trees, and harvesting flowers, fruits and vegetables for food (or animal fodder) and for ornament, as well as treating and enriching the soil and controlling weeds and pests.
Unfortunately the government do not regard horticulture as the landscaping and maintenance of grassy recreational areas (golf courses, golf ranges and community amateur sports clubs (CASC) are exempt - see Q4).
Meaning of ‘purposes relating to agriculture’:
According to the government, agriculture is the growing and harvesting of crops, for food, beverages, fodder, fuel, or industrial purposes; or the rearing of animals for the production of food, wool, leather, fur or other substances.
The keeping or breeding of animals for leisure (breeding dogs or racehorses for example) is not agriculture. The growing of plants for other reasons is not agriculture, but will sometimes be horticulture.
2. How can I operate when my vehicles (tractors, diggers) may switch between agricultural and non-agricultural jobs regularly?
The HMRC suggests the ideal scenario would be to have designated vehicles for allowed / non-allowed purposes.
However, for many contractors this simply isn’t possible, therefore if you are switching to a white diesel operation, the tank would need to be thoroughly drained of red diesel and then flushed out with white diesel.
They (HMRC) have explained they will take a pragmatic approach to checks as they will be looking closely for deliberate fraud in non-allowed vehicles and uses (e.g. use in haulage and construction).
In all cases of switching between red and white diesel you should retain all documentation to show:
• when a vehicle or machine was filled up with red diesel
• when it was flushed out
• when it was refilled with full duty-paid fuel
• that the vehicle or machine has previously been used for allowed purposes (such as invoices from jobs, etc.)
There is no guarantee that any of the above paperwork will be sufficient to avoid seizure of your vehicle if officers detect vehicles or machines with traces of red in a tank of white diesel on a non-agricultural job.
However, it;s expected that the HMRC will be focused on enforcement of criminal evasion and be looking for the use of red in non-allowed operations, such as construction.
3. Can dual tanks be used?
No, this will continue to be illegal.
4. If a golf course / community amateur sports club (CASC) can use red in their own vehicles, can a contractor use red doing grounds maintenance work?
Golf clubs, golf ranges and CASC can use red in tractors, mowers and diggers kept and used on site. As is currently allowed, contractors can take vehicles to these locations on a loader and then use them on site on red after 1 April 2022. However, they cannot be driven to the site on red diesel.
Note: Red diesel cannot be used on playing fields and sports grounds that are not listed as CASC.
5. Can I use red in domestic/private garden use?
No, this is not considered an allowed use.
6. What are the rules of hedge and verge cutting, gritting and snow clearance?
After 1 April 2022, agricultural vehicles may be used for cutting verges and hedges on roadsides, for snow clearance, gritting and clear-up following flooding.
Information taken from the National Association of Agricultural Contractors (NAAC)
DISCLAIMER: The information, advice and opinion given in this publication is given in good faith. However neither Balmers GM Ltd nor any member of its staff accept any liability in respect of any such information, advice or opinion or any application thereof, whether arising by way of negligence or otherwise.