Changes to rebated fuel use are set to be implemented on April 1. While most agricultural businesses will be unaffected, those who have diversified may have to make changes to avoid falling foul of the law.
It comes as no surprise that the entitlement for rebated diesel, or red diesel, is being withdrawn from various industries, as the Government pushes for the development of cleaner and greener alternatives.
The big change about to be implemented applies to vehicles which are used off-road. These will no longer be automatically entitled to use red diesel. Instead, use of the rebated fuel will be based entirely on what the vehicle is used for.
Fortunately, agriculture, horticulture, forestry and fisheries are among the industries which have retained the entitlement to use red diesel.
The construction industry is not so lucky and will become a white diesel consumer from April 1, 2022, virtually doubling the sector’s fuel cost.
Definitions explained in Excise Notice 75 (fuels for use in vehicles) and found on the Government website, provide guidance through the Memorandum of Agreement, which remains largely unchanged.
That said, the fuel issue gets a little cloudy for those operating mixed use businesses.
Jill Hewitt, chief executive of the National Association of Agricultural Contractors (NAAC), says:“There are two things to consider when working out if your business can use red diesel.
“The first is that any work you do is for an agricultural purpose. This is not necessarily the same as just doing work on agricultural land. The operation you are doing must be of benefit to the land/livestock.
“You can also use rebated fuel in agricultural vehicles when: cutting verges and hedges which border a road; clearing snow; gritting and assisting any clear-up following flooding.”
“Secondly, once a legitimate use has been established, it is important to then confirm the vehicle you are intending to use is also allowed to use red.”
The Government’s definition of vehicles and machines able to be used with rebated diesel for accepted purposes is relatively straightforward.
It includes agricultural vehicles, special vehicles, unlicensed vehicles and what it describes as ‘certain machines and appliances’ (see Government guidance ‘Check when rebated fuel can be used’).
Ms Hewitt says: “Technically speaking, if a vehicle is taxed as an agricultural vehicle, it should be used solely for agricultural work.”
Having been in consultation with HMRC, the NAAC has produced a red diesel Q&A, available for download on its website.
“Until April 1, 2022, it is legal to use red diesel in off-road vehicles on non-agricultural work, for example land drainage machines.
“This type of machine would be transported using a low-loader and would not be driven on the road on red diesel. But April 1, this type of machine would have to be run on white diesel for non-agricultural work, even though it is not driven on the road.
“When using the machine for agricultural work, the business can switch back to red diesel. But when switching from red to white, tanks need to be drained and flushed with white diesel and ideally their filters swapped to remove all traces of the rebated fuel.”
The practicalities of swapping are enormous and using dual-fuel tanks remains illegal. HMRC suggests the ideal scenario would be to have designated vehicles for allowed and non-allowed purposes.
Those faced with storing large quantities of white diesel will also need to invest in robust fuel security measures to safeguard the higher value fuel.
Ms Hewitt says: “Avoiding dedicated haulage jobs using red diesel will be key to staying on the right side of the law. If you are involved in the harvesting of a crop as part of a silage team, you can use red. But if you are only doing haulage, for example taking bales to a customer, then it must be white.”
Tasks relating to sport or recreation, for example drilling a game cover for a commercial shoot, or telehandler work around an equestrian yard, would require white diesel.
Agricultural processing vehicles, such as mobile mill and mix, or mobile seed dressing vehicles, can continue to use red on the road, but they must not carry a load.
Further Guidance
- The National Association of Agricultural Contractors: www.naac.co.uk
- Fuels for use in vehicles – Excise Notice 75: gov.uk
- Check when rebated fuel can be used:gov.uk
