Guidance concerning the use of Red Diesel

Published 24th February 2023


From 1 April 2022, changes to UK law meant that many people and businesses who use red diesel (AKA rebated fuel; gas oil; tractor diesel) had to switch to more costly white diesel, which carries the full Fuel Duty rate.

How do the changes affect you?

Impact on the Tax rebated fuel scheme

Red diesel and rebated biodiesel are used across the UK in non-road vehicles and in premises where it is used to create power and heat.  In support of the industries that used these fuels (Agriculture, NHS etc) tax breaks were put in place which reduced the cost of the fuel (rebated it) and therefore the overall cost to the business.  In March 2021 the Government announced its plan to remove this rebate for many industries with effect from 1 April 2022.

The main changes

The main change to the rebated fuel scheme is that red diesel and rebated biodiesel cannot be used by commercial businesses for heating or power generation.  It is still available for non-commercial premises such as hospitals, agriculture, places of worship etc.

The impact on your commercial business

The impact on commercial businesses that used red diesel are mainly cost related.  These businesses include construction and manufacturing.  Now they will only be able to buy and use white diesel.  White diesel has a standard, non-rebated fuel duty so has an increased cost.


Can stocks still be used up post changes to the legislation?

Generators for Standby or Emergency use only – Yes!

Stocks of red diesel remaining for generators can be used up after the changes, with HMRC confirming that its officers will not seize stocks IF the business “can provide evidence to satisfy officers that they have not built up their stocks or taken red diesel into the fuel system after the rules changed”.

The government recognises that some users (for example, a data centre that holds a 3-day supply of diesel in their generator for use in case of emergencies) may only use the stock for a few hours a year.  Therefore, if they can prove that their last purchase of red diesel was purchased some time before the tax change this stock will not be seized.

Our Advice: The key to providing the abovementioned evidence is keeping receipts of the red diesel purchased before the change and of white diesel purchased afterwards.

Non-generator stocks – No!

For other non-generator related stocks (e.g. stocks to be used in vehicles or shunters), the red diesel or rebated biodiesel can no longer be used by the business and should by now have been disposed of.  It should be noted that if you have kept stocks after the changes that you should have disposed of, HMRC have the power to take appropriate action, which includes seizing stock.

 Do I need to do anything else?

A hidden issue has arisen through Government guidance.  Originally, they advised that those currently using red diesel should have a full tank and equipment clean so there would be no trace of red diesel in any part of the installation.  However, after a consultation process (in which Fuel Storage Solutions was involved) this requirement has been removed.

Having said that, you should note that HMRC officers will check for traces of red diesel or rebated biodiesel.  In doing so they will consider the type of machinery and the frequency of use to decide whether detected traces are at a level consistent with compliance with the new rules and therefore whether they have been breached.


What can Fuel Storage Solutions do for you?

Our team of experts are on hand to help you by offering the following services:

  • Removal and disposal of fuel
  • Replacement of fuel
  • Tank cleaning
  • Ancillary equipment on the installation flushed out and cleaned
  • Tank assessments

Call our Operations Team on 01274 813003 to find out more.