Is your business ready for upcoming red diesel tax changes?

As of 1st April 2022, government regulations regarding the use of red diesel will be changing. This means fewer sectors will be permitted to use red diesel as they currently do now. For businesses that need to switch, price increases will prove inevitable by changing to the higher-priced standard diesel alternative. Therefore, it’s important to make sure you and your fleet are ready for these red diesel changes in 2022. We’ve put together a full breakdown of how to prepare for the red diesel law change to help you during the transition period, including important fuel card information.

What is Red Diesel?

Red diesel, or gas oil, is a form of rebated diesel which is dyed red and is used for agricultural and commercial off-road purposes. The red dye stains the fuel tanks it is used in, making it easy to identify when someone has used red diesel. It is illegal to use red diesel for road vehicles, and being found to do so can result in serious consequences and is classed as tax evasion. Currently, red diesel has a much lower rate of exercise duty than road fuel, making it a popular choice for agricultural and commercial businesses for their off-road vehicles.

Red Diesel Changes in 2022 Explained:

What’s changing and why?

From 1st April 2022, the UK government red diesel law change will further restrict the use of red diesel to a more select list of industries to reduce emissions. Red diesel accounts for 15% of all diesel used in the UK, and the government has stated that it is responsible for almost 14 million tonnes of CO2 a year.

Limiting the use of red diesel is part of the government’s target to reduce CO2 emissions to net zero by 2050. However, this commitment presents a lot of new challenges for fleet managers. The production and sale of new petrol and diesel cars will be banned in 2030, followed by plug-in hybrids in 2035, then HGVs in 2040.

After 1st April 2022, the following changes in legislation will come into effect:

- Only “excepted machines” will be able to use red diesel and rebated biodiesel.

- Changes will be made to make heating a chargeable use for biodiesel as well as other heating-based legislation.

- The legislation covering restrictions on the use of rebated fuels and penalties will be updated.

The government hopes that this measure will encourage businesses to switch from red and white Diesel fuels to greener fuels such as SuperHeat35, HVO, or natural gas fuels such as GTL or NGL.

Who can and can’t use Red Diesel from 1st April 2022?

Going forwards, only “excepted machines” will be able to use red diesel and rebated biodiesel. This means that, after the deadline, red diesel may only be used for:

- Off-road vehicles used in agriculture, horticulture, fish farming and forestry, including vehicles used for agriculture to cut verges and hedges, snow clearance and gritting roads.

- Propelling passenger, freight, or maintenance vehicles designed to run on rail tracks.

- Heating and electricity generation in non-commercial premises. This includes heating homes and buildings such as places of worship, hospitals and town halls; off-grid power generation; and non-propulsion uses on permanently-moored houseboats.

- Maintaining community amateur sports clubs and golf courses (including activities such as ground maintenance, the heating and lighting of clubhouses, changing rooms, etc.)

- Fuel for all marine craft refuelling and operating in the UK (including fishing and water freight industries), except for propelling private pleasure craft in Northern Ireland.

- Powering the machinery (including caravans) of travelling fairs and circuses.

The government’s list for who can use red diesel beyond the April deadline can be viewed online. If you are unsure of how this will affect your business, you can contact HMRC to enquire. Or you can speak to a member of our team for information on how our fuel card services can help you, call us now on 0800 158 35 82 or send us an enquiry.

How could red diesel tax changes affect your business?

For those who will lose their entitlement to use red diesel, it’s important to note that, after the deadline, there will be no grace period for you to finish your old stock. So, for those who have red diesel stock, it’s worth thinking about how you will use or dispose of this before April.

To avoid your white diesel being stained with the red diesel dye marker after the deadline, you will need to have your tanks and supply lines flushed to remove residue from prior red diesel use. This practice, along with keeping records of your fleet’s fuel purchases, will avoid any risk of your white diesel being mistaken for red diesel.

If you choose to switch to white diesel (as opposed to green alternatives), this will also mean an increase in your business’ fuel costs. This is because white diesel has a fuel duty rate of 57.95 pence per litre (ppl) while red diesel is entitled to a rebate of 46.81ppl, giving it an effective duty rate of 11.14ppl, meaning an increase in 48.81ppl for those who will be switching.

Annual usage per year

5,000 litres

10,000 litres

100,000 litres

500,000 litres

Cost increase per year





On white diesel, you will also pay standard rate VAT at 20%. If you would like a free in-depth analysis of your fuel spend to see where and how you could be saving money, call us today.

So, what you can do to make sure your business is ready?

To make sure your business is ready for the upcoming changes, there are a number of steps you can take.

1. Firstly, check which of your vehicles are currently using red diesel and establish whether they will be included in the “excepted machines” list. You can do this by checking online or contacting HMRC.

2. Keep copies of your fuel purchases for your red diesel vehicles whilst making the switch, and flush your tanks to get rid of the red diesel marker.

3. Calculate how the price increase from red to white diesel may affect your business’s fuel budget.

4. Consider the option of switching to greener fuels.

Contact us for a free and in-depth analysis of your fuel card spend to see if you could be saving money.

For those who will no longer be able to use red diesel, the upcoming changes may seem daunting, and the price increase will affect your fleet’s outgoings. To make sure you are getting the best deal, you can give us a call on 0800 158 3582 to discuss your fill-up points and cards and see if there are any alternative routes, stations, or offers that could help your business be prepared.


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