Get ready for the 2022 red diesel tax change

From 1st April 2022, the government will remove the red diesel rebate for most industries, meaning many users will need to swap to white diesel or other renewable fuels like HVO (hydrotreated vegetable oil). These changes will have significant cost implications for businesses in construction, rental and power generation.

The exact implications will depend on your industry. Some industries are exempt from the changes – check the following guidelines from HMRC.

If you are a business that deals with fuel tanks, we’re here to help guide you through the upcoming red diesel changes. This overview identifies the potential implications for your business, addresses any concerns, and offers recommendations to prepare you for this change.

Getting the facts right – Q&A:

1. What is the red diesel duty change, and why is it changing?

Red diesel (off-road rebated diesel) currently attracts a rebate of 46.81p per litre, with a low duty rate of 11.14p per litre. From 1st April 2022, the red diesel rebate will be removed for most industries, meaning many businesses will have to change to either white diesel or HVO.

Red diesel consists of 15% of all diesel consumption currently used in the UK. The government is making these changes to encourage businesses to use alternative fuels, such as HVO, and help reduce the environmental impact.

2. What happens to any red diesel in fuel tanks after 31st March 2022?

HMRC is working with fuel suppliers and registered dealers (RDCOs) to inform their customers of the changes. This is to ensure users are not over-ordering supplies of red diesel on top of their usual orders ahead of the 1st of April deadline.

Tanks are not allowed to be refilled with red diesel from the 1st of April 2022, but if you have any existing red diesel in a tank before this deadline, you will be able to use the fuel in the tank. Operators are not expected to flush out fuel tanks ahead of 1st April.

The rules are complicated, so we recommend reading further guidance on the government website. If you are in the rental industry, please refer to: https://www.cpa.uk.net/news/cpa-publishes-revised-red-diesel-guidance Alternatively, give our team a call.

3. Is this an opportunity to switch to a renewable fuel replacement?

This change presents an opportunity for businesses to consider renewable fuels, like HVO (Hydrotreated Vegetable Oil). HVO is fossil-free and made from 100% renewable feedstocks. HVO is a direct drop-in for traditional diesel and compatible with all Western Global fuel tanks.

HVO can reduce carbon emissions by up to 85% vs fossil diesel, with 50% fewer particle emissions, improving local air quality. Many Western Global customers have also reported that HVO burns more efficiently and cleaner than fossil diesel in their machinery.

4. How can Western Global help make a difference today?

We realise the increase in fuel cost will present concerns around fuel security across power generation and construction industries. At Western, our tanks are the most secure on the market – with lockable cabinets and security features- including concealed hinges and tamper-proof locking devices. Our secure cabinets also provide a place for automated fuel management systems that prevent theft and track fuel consumption.

DOWNLOAD our handy Red Diesel Tax change Checklist