In Focus: Red diesel changes, April 2022 - new rules explained

In April 2022, the government implemented some far reaching changes to how red diesel – otherwise known as rebated diesel – could be used.

The changes had significant implications for a range of industrial sectors in the UK, in particular construction, mining, and manufacturing.

They were introduced to encourage these sectors to end their reliance on fossil fuels and invest in new, cleaner technologies for powering vehicles.

Agriculture has traditionally relied on red diesel too, to fuel vehicles used to carry out work in fields and around the farm such as ploughing, fertilising, herbicide and pesticide applications, and combining.

Whereas agriculture, horticultural and forestry have all kept their exemption which enables workers in these sectors to use red diesel, it is important the activities undertaken fall under the definition of agriculture, horticulture and forestry for that use to be legal.

In this article we look at these definitions to ensure farmers and land managers stay on the right side of the law.

Before we look at the impact of the changes, let’s remind ourselves of what red diesel actually is.

Red diesel is the same product as white diesel that is used to run road vehicles and that can be bought on petrol station forecourts the length and breadth of the country. However, whereas white diesel is subject to the full rate of excise duty, red diesel is subject to a lower level of excise duty, hence the name rebated fuel.

Rebated fuel contains a mix of chemicals, including a red dye marker, to distinguish it from white diesel to prevent people from using it to fuel road-going vehicles.

Rebated diesel also includes rebated biodiesel and hydrotreated vegetable oil (HVO) – diesel-quality fuels derived from biomass, also including red dye.

Until April 2022, red diesel could be used by a range of industries to power vehicles that were used away from the public road network, such as diggers and rollers on construction sites, vehicles used in mining, and plant and machinery used in manufacturing.

However, the fuel duty changes mean these industries were effectively banned from using rebated fuel from April 2022 and have had to change to full duty, white diesel.

As a result of the changes in red diesel laws in 2022, some people mistakenly think red diesel is banned altogether. However, this isn’t the case. There are still circumstances, for some sectors, where the use of rebated fuel is permitted, and the good news for many of our members, particularly those involved in agriculture, is that they can continue to use it.

The new rules state that there are two elements to be considered when deciding if a vehicle is eligible to use red diesel or not. These are what type of machine it is and what it is going to be used for.

According to government guidance, the types of vehicle that qualify to continue to use red diesel after April 2022, include:

• Vehicles designed to operate on a railway
• Agricultural vehicles
• Special vehicles
• Unlicensed, including SORN (Statutory Off Road Notification) vehicles.

However, being in the above list isn’t by itself enough to qualify the vehicle to use rebated fuel. To qualify, the vehicle, machine, or engine must also be involved in at least one of the following activities:

• Agriculture, horticulture, aquatic farming or forestry
• On land maintained by a community amateur sports club (CASC)
• On a golf course or driving range
• On land occupied by a travelling fair or travelling circus
• Heating or generating electricity in a non-commercial premises
• Cutting hedges, verges, or trees that border public roads
• Clearing frost, ice, snow or flooding and for collecting or returning necessary equipment or materials to carry out this function.

Therefore, if you fulfil these criteria, it is legal to continue to use red diesel.

So, what does this mean for farmers?

For farmers to legally continue to use rebated diesel, the vehicle or machine they intend use it in must qualify as an agricultural vehicle. This includes tractors as well as single-seat vehicles of less than 1,000kg designed and constructed primarily for use off-road.

Other vehicles used for agricultural, horticultural or forestry purposes can qualify to use rebated fuel, but only if they are licensed by the DVLA to only use public roads when passing between two areas of land occupied by the same person, at a distance of less than 1.5 kilometres apart.

Vehicles with permanently attached or built-in machinery used for handling or processing agricultural, horticultural, aquatic farming, forestry produce or materials are also permitted to use red diesel. This covers vehicles such as combine harvesters, crop sprayers, forage harvesters, pea viners, mobile seed cleaning machines and feed milling machines.

However, vehicles primarily designed for carrying goods, produce, and implements, such as pick-up trucks and other forms of transporter, are not classified as agricultural vehicles and so are not able to use red diesel.

The biggest challenges will be faced by farmers and land managers who carry out a combination of permissible activity and non-permissible activity, such as using a digger for agricultural and non-agricultural purposes.

In response to this, HMRC suggested the most practical solution would be to run all vehicles on white diesel, although this doesn’t make economic sense for farmers or land managers.

Another HMRC suggested solution is to have designated vehicles for permissible work and non-permissible work, but again, this is highly impractical for most farmers, contractors and land owners.

Unfortunately, therefore, if swapping between permissible and non-permissible uses, a vehicle must be run on the correct fuel for the activity being undertaken. To avoid penalties, this means the tank must be fully drained and washed out with white diesel when being used for a non-permissible activity such as civil engineering or construction work, to get rid of any traces of the red dye.

Using red diesel in vehicles or machines that are not permitted to do so, or using it for non-permissible purposes, is a crime and if you get caught doing this, the penalties can be severe.

The first action of HMRC will be to seize the vehicle, vessel, or machine in which the fuel is being unlawfully used for inspection, and this may lead to the owner of the vehicle having to pay the outstanding duty on the fuel, as well as a fine for wrongdoing if the misuse was a deliberate act rather than a mistake.

In serious cases where repeated unlawful use is suspected, HMRC may require the offender to pay additional fuel duty evaded for a period of up to four years.

A standard fine of £250 is charged for buying rebated fuel for use in a vehicle or machine not permitted to use it, for the misuse of the fuel, and for selling the fuel for an unlawful use.

A £250 fine is also charged if mixed fuel containing rebated diesel or kerosene and any non-rebated fuel is found.

Attempting to remove the red dye marker from rebated fuel, or add anything to the fuel to stop it being identified as red diesel, is also punishable with a fine, and deliberately making false declarations on paperwork regarding red diesel purchase or use may lead to prosecution and the seizure of goods.

In the case of more serious offences involving assault or repeated offending, criminal action may be taken. In this case, the offender may face an unlimited fine or a prison sentence for up to 7 years, or both.

For more information about staying on the right side of the law when buying and using red diesel, or on a range of other issues that might affect you, why not join the CLA? Our experts policy advisors are always on hand to ensure you are following the latest guideline and legislation.