Red Diesel: HMRC Interim Guidance


Earlier in 2021 the UK Government confirmed its decision to remove the entitlement to use red diesel from most sectors from April 2022.  Construction has not been identified as a sector where there are exceptional reasons to maintain entitlement beyond 1st April 2022.

In the 12 months prior to the announcement the SPOA had been involved in the Treasury “consultations with industry” with the aim of forming an achievable seven year road map out of fossil fuels but the treasury were determined to proceed.

The Treasury are intent on using the tax increase to incentivise change to a greener industry. Manufacturers have said that there is reduced incentive to spend on R&D and manufacture of green machines when diesel is cheap. Green equivalents have to be cheaper to run than diesel equipment before there is a market for them.

The rebated fuels affected by these changes are rebated (red) diesel, rebated Hydrotreated Vegetable Oil (HVO), rebated biodiesel and bioblend, and fuel substitutes. HVO is a liquid hydrocarbon which is classified for excise purposes as heavy oil and treated the same as diesel.

Those no longer allowed to use rebated fuel in diesel-powered vehicles, machines and appliances will be required to use diesel or biofuels on which the full rate of fuel duty has been paid.

Following input from the SPOA and other trade federations, Interim Guidance has been issued by HMRC on use of red diesel and other rebated fuel going forwards from April 2022.

You can download a copy of the latest HMRC guidance below.

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