Recently, in the March 2021 budget, the upcoming changes to tax relief for red diesel were confirmed by the Chancellor of the Exchequer. This will result in a withdrawal of the tax relief for certain sectors and applications. This new legislation will be introduced next year. 

Red diesel is the name given to diesel fuel that is used ‘off-road’, also known as cherry red, or tractor diesel. As it is used for commercial and agricultural purposes, off the public roads, it is taxed at a lower rate. However, there are strict requirements for when it can be used, so it is dyed red for identification purposes. 


What does the March 2021 budget mean for red diesel?

The March 2021 budget means that, from 1st April 2022, red diesel will only be supplied for a shorter list of applications. 

The implications of these changes on your business will depend on what industry you are in, and what you are using the fuel for. Some sectors that have lost out on the tax relief include construction and manufacturing, as well as some uses for transport and logistics. 

For businesses in these sectors, there will be a significant cost increase. Switching to regular white diesel can potentially increase their fuel spend by up to 500%. 


Can I use the red diesel I have already purchased before the tax change?

The Government have warned those losing their red diesel entitlement that there will be no ‘grace period’ to use up old stocks after April 1st 2022 arrives. All stocks must be used up before this date, and regular white diesel must be used from that day onwards. 

It has also been advised that when switching from red diesel to white diesel, businesses will need to ensure they flush out their storage tanks and supply lines to remove any traces of the old fuel. Hopefully, further detail on this will be given out by the government with specific instructions and guidance on this switchover. 


Which applications will be unaffected by the red diesel tax changes?

The following applications will still be able to purchase red diesel and the tax changes will not affect them:

  • Vehicles and machinery are used for agriculture, horticulture, fish farming and forestry. Including vehicles used for cutting verges and hedges, clearing snow and gritting roads.
  • Passenger, freight or maintenance vehicles that are designed to run on railway tracks.
  • Heating and electricity generation in non-commercial settings. including heating homes and buildings, places of worship, hospitals and town halls; off-grid power generation; and non-propulsion uses on permanently moored houseboats.
  • The maintenance of community amateur sports clubs and golf courses (including ground maintenance, heating, lighting and changing rooms etc.)
  • Marine craft refuelling and operating in the UK (including fishing and water freight industries), except for private pleasure crafts in Northern Ireland.
  • Powering machinery (including caravans) of travelling fairs and circuses.


What does this mean for Quad Fuels?

We will be affected by the changes as a business too, as we will have to begin buying in more stocks of white diesel to deliver to all the businesses that are switching over. This will also come at a significant cost to us upfront.

Quad Fuels will still remain a trusted supplier for your fuel needs.

If you have any questions about this change, you can read the full policy on the Government website here. Alternatively, you can speak to one of our team and we will do our best to assist you.


Upcoming Tax Relief Withdrawal for Red Diesel
Article Name
Upcoming Tax Relief Withdrawal for Red Diesel
Recently, in the March 2021 budget, the upcoming changes to tax relief for red diesel were confirmed by the Chancellor of the Exchequer.
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Quad Fuels