In the March 2021 budget, the Government confirmed forthcoming changes to red diesel taxation, with plans to withdraw tax relief for red diesel for several sectors and user groups, these changes will come into effect from the 1st April 2022.
The change is being introduced to encourage the development
and usage of cleaner, more sustainable fuels such as hydrotreated vegetable oil
(“HVO”) instead of fossil fuels to aid the government’s commitment to achieving
target Net Zero emissions by 2050.
Otherwise known as gas oil, off-road diesel or ‘tractor diesel’, red diesel is a fuel intended for use other than as a fuel in road vehicles and is therefore taxed at a lower rate than white diesel, also known as road diesel or DERV. Due to it being taxed at a lower rate there are strict legal requirements about when and how it can be used.
As of 1st April 2022, many sectors that use red
diesel will need to move to an alternative fuel that is taxed at the standard
rate for white diesel.
Whilst many businesses may have assessed their usage and
planned their transition to alternative fuel, some will be unsure of whether
they remain exempt or not and what the financial implications will be to their
business when switching from red to white diesel.
If you currently use red diesel in machinery, vehicles, generators or for heating purposes in the following sectors you will be affected by the changes and need to make the transition to an alternative fuel.
From the 1st of April 2022, WCF Fuels North East will only be able to supply red diesel to your business if the application is for the sole purpose of the following:
If your application is included in the above list of qualifying uses, there will be no change at all. You can continue to order, receive and use red diesel after the changes come in.
Suitable replacements for red diesel are either standard White Diesel (Derv) or hydrotreated vegetable oil (HVO)
Gas Oil users currently only pay 11.14p per litre in duty in contrast to the 57.95 ppl for derv. This means switching to derv will increase the duty you have to pay by 46.81p per litre. Depending on how much you buy a year this could substantially increase your fuel bill and impact your available credit limits.
As you’ll be aware, the red dye in gas oil is added so that it remains in both pipework and fuel tanks. This could lead to authorities believing that anyone who is now using derv might have illegally used gas oil previously. However, HMRC has confirmed that customers who switch from gas oil to derv won’t be required to flush out their tanks, avoiding the high cost associated with flushing. We advise that you manage your stock of gas oil to run down to as close to zero on 31st March 2022 as is practically possible. As far as we are aware, HMRC will not be conducting physical checks at our customer's premises. However, they will look at paper records and ordering patterns to ensure those impacted by these changes managed their stock in such a way to achieve a clean switch to derv from 1st April. You should keep hold of any fuels invoices and avoid stockpiling.
Those customers who will be storing larger quantities of white diesel should ensure that their premises are secure to mitigate the risk of theft. Tank monitoring or telemetry systems are also available to alert you to any unusual patterns of fuel movement.
In order for WCF Fuels North East to supply red diesel to your business, please download our updated customer declaration form or request a copy at enquiries@wcfnortheast.co.uk or by calling 0191 5186770.
Here at WCF Fuels North East, we want to support our customers through this period of transition to ensure we achieve this deadline with minimal disruption to your business. Our trusted advisors will be happy to answer any questions you may have about these changes.
Here is a link to the Government website (“Gov UK –
Reform of red diesel and other rebated fuels entitlement”) which sets out these
changes in more detail.
WCF North East has been supplying fuel for over 110 years, we are a guaranteed high-value delivering service that offers the highest quality products only a truly dedicated local fuel supplier can offer.
From home heating oil to Road diesel to Red diesel we offer a wide range of fuels and services that are tailored to your wants and needs, whether you are a domestic homeowner, a commercial business, or an agricultural farm! From our offices to our depots our hardworking team members are here to make sure your experience with us is smooth from the first quote to the moment our driver delivers the fuel.
Buying our products and services is just the start with WCF North East, we also provide schemes such as priority customer, which rewards you with exclusive benefits and deals to thank you for your ongoing trust, loyalty, and custom.
