Government Changes to Red Diesel Taxation

Red diesel goes by multiple names, such as tractor diesel and off-road diesel. It is a gas oil used as fuel to power off-road machinery and vehicles. They are the kinds of off-road vehicles used in the construction and agriculture industries.


Until April 2022, the UK government had placed a lower tax rate on red diesel than on other fuels in the country. But operators had to follow specific legal requirements to be eligible for the lower tax rate, such as ensuring the fuel is dyed red to help stop illegal usage.


Government changes to red diesel taxation took effect on April 1st, 2022. Now, when an operator uses off-road machinery or vehicles for construction projects, they can no longer use red diesel for a lower tax rate. Instead, they must use regular diesel fuel at the standard tax rate.


The purpose of these changes to red diesel taxation is to reduce carbon emissions and promote a more eco-friendly environment. The government also wants to encourage construction workers to consider using greener fuel alternatives to standard diesel, such as renewable fuels like hydrotreated vegetable oil.


Naturally, many construction businesses have been negatively impacted by these government changes because it means their fuel expenses have risen. But the good news is that they can use hydrotreated vegetable oil in regular diesel engines without upgrading their machinery with a bio-diesel engine.


In addition, agricultural businesses will not be impacted by the government’s changes to red diesel taxation. So if you are operating a farm or managing forestry, you can continue to use red diesel for your machinery.