REFORM OF RED DIESEL ENTITLEMENT
The measure will come into force from 1 April 2022
In brief . . .
The UK is set to get greener.
The UK is set to get greener.
Take note:
What is exempt from the changes to red diesel legislation?
This measure introduces legislative changes through Finance Bill 2021.
Vehicles and machinery in . . .
The propulsion of . . .
Heating and electrical generation of . . .
For maintaining . . .
Marine craft refuelling . . .
For powering . . .
Why is a reform of red diesel entitlement happening?
This measure introduces legislative changes through Finance Bill 2021.
June 2019
With air pollution being one of the bigger continual threats to public health, the UK government had to act. Eager to shift the tide, they launched an ambitious new strategy to go green and save lives. In doing so, the UK became the world’s first major economy to pass laws guaranteeing an end to its contribution to global warming by 2050. Under the new target, the UK aims to bring all greenhouse gas emissions to net zero by 2050. Previously, the UK had aimed for a minimum 80% reduction compared to the levels found in 1990.
Why is red diesel such a big deal?
Accounting for around 15% of all diesel used in the UK, red diesel is responsible for nearly 14 million tonnes of carbon dioxide a year. Red diesel is mainly used for off-road purposes. This can include powering bulldozers and cranes used in the construction industry or power drills for oil extraction. In London 2018, pollution concerns arose surrounding the construction and infrastructure building sectors. These specific sectors were estimated to have caused 7% of nitrogen oxide emissions and 8% of PM10 emissions (a type of particulate matter).
Budget 2020
With these findings in mind, the government sought to meet its climate change and air quality targets. To fulfil this, tax changes would incentivise users of polluting fuels – like diesel – to improve their energy efficiency. Effective April 2022, entitlement to use red diesel would be removed and rebated biodiesel from most sectors. Cleaner alternatives for vehicles and machinery should be found, or users should simply use less fuel. Going forward, tax changes for red diesel more fairly reflect the harmful impact of the produced emissions.
Locators’ Energy & Carbon Saving Initiatives
Looking to the future after 10 years of lifting green standards
How has the reform of red diesel entitlement come about?
Historically, fuel duty was intended to be a tax on road vehicles
Red diesel= 11.14 pence per litre
White diesel = 57.95 pence per litre
Budget 2020
The government announced the removal of entitlement to use red diesel from most sectors. This would come into effect from 1 April 2022, with the exception of:
o The agricultural sector
o The forestry industry
o The fish farming industry
o The horticultural sector
o Non-commercial heating
o The rail industry
To ensure they had not overlooked any exceptional reasons, the government consulted last summer. They reconvened to examine the case for whether other sectors should be allowed to continue using red diesel. The outcome of which, was set out in the summary of responses to the consultation and published alongside Budget 2021.
Budget 2021
The government announced its decision not to change the treatment of private pleasure craft in Great Britain. Private pleasure crafts will continue to use red diesel and pay their fuel supplier the difference. The difference would be between the red diesel rate and the white diesel and the proportion they intend to use for propulsion.
Operative Date
The measure will come into force from 1 April 2022.