What changes are being made to Red Diesel ?

Many industries will be affected when red diesel loses its tax-free status in April 2022. In this article, the MHM Group details all you need to know about the use of rebated red diesel fuel.

Put simply, the Government is making changes to the taxation of red diesel. From 1st April 2022, the entitlement to use red diesel will be far more restrictive than the current rules.

At present, business owners benefit from a 47p-per-litre tax rebate for its use, but as of April 2022, most sectors (except for agriculture, rail and non-commercial heating) will have to switch to ordinary ‘white’ diesel costs, taxed at the full rate. That means many businesses will be paying five times as much in fuel duty as they do currently. 

What exactly is red diesel? 

Red diesel is widely used in the agricultural, marine and construction sectors. It is the same as regular diesel, but with a red dye added to it. Some fuels are occasionally required to be dyed so that they can be identified and prevented from being used on road-going vehicles. It has been the lower price option when compared with other fuels if you are buying it for off-road uses.

How does this change affect businesses?

With the world battling climate change and working towards a cleaner and more sustainable future, the UK Government has made it clear that low tax diesel is no longer acceptable. 

However, UK Gov also recognises that adopting a restrictive policy on red diesel will be an added burden in these difficult economic times to certain sectors. Gov.UK has noted that HMRC will allow some leeway to businesses during this transition, to help them. “This is so that businesses can use up red diesel taken in before the change, for example, HMRC will have the ability to disapply the liability to the seizure of fuel where they can be satisfied that the user has not taken red diesel into the fuel system after the change in rules for usage.”

Though this is useful for businesses to know, there is still a big rise in red diesel costs, combined with pressure to meet sustainability targets.

What are the alternatives?

There is still plenty of time for the industries affected to explore alternatives to red diesel. With net-zero in mind, The MHM Group is urging industry leaders to adopt the use of cleaner alternatives. An example of this is using HVO (Hydrotreated Vegetable Oil).

What is HVO Fuel? 

HVO is a premium quality fuel made from 100% renewable raw materials and can reduce CO₂ emissions by up to 90% when likened with fossil-fuel diesel. Every 1,000 litres of diesel burned produces 3.6 tonnes of greenhouse gas CO2, compared to just 195kg GHG CO2 for every 1,000 litres of HVO burned.

HVO fuel can be safely stored for up to ten years, whereas regular diesel, even under ideal conditions, can only be stored between six and twelve months. Therefore, using HVO can reduce the possibility of fuel contamination, breakdowns and fuel testing. Tests have indicated that HVO fuel provides better starting, cleaner combustion and consequently less chance of waxing and water retention in extreme temperatures.

How can the MHM Group help?

As a leading supplier of a range of sustainable equipment, including solar hybrid generators and lighting towers, the MHM Group has launched a new eco initiative, that offers lower-emission solutions to the plant hire and construction sectors.

As of 2021, all of our diesel-powered machinery, principally generators and lighting towers, are now fully compatible, approved and safe for use with HVO fuel.

MHM continues to increase its hire fleet, with more than 30% of our equipment being solar and battery hybrid machines, as part of a comprehensive approach to a sustainable future. The MHM Group is here to support those industries affected and help with the transition from red diesel, and beyond.

If you require further product information, please contact us on 08081 689 099. 

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