Changes to red diesel entitlement

In the 2021 budget, the government confirmed some changes to red diesel taxation, in line with what had previously been discussed in the 2020 consultation. But what does this mean for the companies and businesses using red diesel? Well, here at Compass Fuel Oils, we are the UK’s leading fuel oil specialists, providing next day delivery across the UK. As a result, we have created this guide to everything you will need to know about the changes to red diesel entitlement.

So, what are the changes to red diesel entitlement?

The changes to the regulations surrounding red diesel mean that any company or business in an industry sector that is not listed below, will no longer be able to use red diesel legally. The only sectors to retain red diesel will be:

  • Agriculture, horticulture, fish farming, forestry
  • Railways
  • Non-commercial heating systems, such as off-the-grid homes, places of worship and narrowboats
  • Fishing and water freight
  • Travelling funfairs and circuses
  • Amateur sports clubs
  • Golf courses
  • Non-commercial power generation

In addition to the changes to red diesel entitlement, the government is also making changes to the fuel duty applied to biodiesel, biofuels and fuel substitutes intended for heating.

These new regulations will come into place after April 2022, and HMRC will be authorised to seize vehicles or other machinery in specific cases.

What happens after April 2022?

If your company or business uses red diesel already, but will be unable to continue using this after April 2022, what should you do? Well, there are two key things you will need to know:

  1. You will not be able to purchase red diesel beyond April 2022
  2. There will be no period of grace for using up or finishing off reserves of red diesel beyond April 2022. Instead any storage tanks must be emptied and flushed out ahead of the deadline, so that enforcement inspectors can clearly tell the difference between illegal red diesel and standard ‘white’ diesel. This includes asking registered fuel suppliers who may be switching a fuel tank from red to white diesel, to completely flush out the tank and supply lines, to ensure full compliance and reduce the risk of white diesel being contaminated with the red diesel marker.

Which industries will be hit the hardest?

With the changes to red diesel entitlement, some industries will be hit harder than others. The one clear industry to suffer from this is the construction industry, which is already looking at contingency plans.

Compass Fuel Oils can help!

Here at Compass Fuel Oils, we provide professional furl uplift services as well as removal of waste fuel oil. This means that we can flush and clear your fuel tanks ready for the addition of white diesel, ensuring that your company remains compliant with legislation.

For all your fuel oil needs, from storage tanks to red diesel deliveries, we are the team you can count on, here at Compass Fuel Oils.