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Budget 2021: The Facts for Red Diesel Users

What changed in Budget 2021 for red diesel users?

Budget 2020 outlined the government’s plans for the future of red diesel entitlement for UK homes and businesses. The plans, whilst controversial at the time, were driven by the need to reduce greenhouse gas emissions – especially if we are to meet the government’s net zero carbon goals by 2050.

However, the political, social and financial landscapes have been forever changed since the early months of 2020. Between the last-minute Brexit agreement and the grim realities of the Coronavirus pandemic, it was always likely that the original plans would change. The real question is, by how much?

What did the government say in 2020?

The initial plans were as ambitious as they were severe; most users would lose the right to use red diesel from April 2022. Only a few sectors and users would retain access to the fuel, including:

  • Railways (both passenger and freight)
  • Agriculture, horticulture and forestry
  • Fish farming
  • Non-commercial heating systems (i.e. off-grid homes, domestic narrowboats and places of worship)

This announcement was followed by a consultation period, where the government asked current red diesel users for their feedback. It also provided an opportunity for both sectors and individuals to put forward their cases for retaining access to gas oil, for example where ministers weren’t aware of aspects of the fuel’s use.

The government received some 400 responses during this consultation period, and used the information received to refine their plans in the 2021 Budget.

What changed in the 2021 budget?

2020 was a year of unprecedented change, and the government’s response to the coronavirus pandemic has cost the treasury billions. It wasn’t beyond the realms of possibility that Chancellor Rishi Sunak might bring forward the changes to red diesel eligibility, or even further restrict its use.

Instead, several additional gas oil-reliant sectors were added to the list of users who will be able to continue to use red diesel past the April 2022 cut-off date, namely:

  • Fishing vessels and water freight
  • Community amateur sporting clubs and golf courses
  • Travelling funfairs and circuses
  • Domestic (i.e. non-commercial) power generation
  • Power and heating in non-commercial buildings e.g. state schools and hospitals
  • Agriculture, horticulture and forestry
  • Rail transport (only in vehicles designed to run on rails)

Private pleasure boats will also continue to have unrestricted access to gas oil for power, heat and propulsion, though with a caveat. Whilst red diesel used for power and heat is rebated, any diesel used for propulsion is subject to the standard level of fuel duty.

Do I need to clean red diesel out of my tank?

If your sector/use case is losing its red diesel eligibility:

You should run down your existing stocks of red diesel before the April 1st 2022 cut off. In addition, your fuel supplier must not supply you with more than you can use before this date.

Tank cleaning should only be carried out by industry professionals. This minimises the risk of damage to tanks, peripherals and from fuel contaminating your local environment.

If you are a fuel supplier who will no longer supply red diesel:

You must flush any tanks that will no longer be used to store or supply red diesel. This is to ensure that customers don’t receive white diesel that’s contaminated with red diesel dye.

If your business will no longer supply controlled oils after these tax changes, including gas oil, then government guidance states that you should de-register from the Registered Dealers in Controlled Fuels (RDCO) scheme.

What about red diesel suppliers?

RDCOs like us at Nationwide Fuels have to flush our pumps, tanks and supply lines to remove all traces of red diesel wherever we’re switching over to white diesel (DERV). As we’ll still supply red diesel after the 1st April 2022, we will continue to operate as we do now – ensuring that none of our DERV customers receive traces of red diesel in their fuel.

How can I dispose of red diesel I don’t need?

If you have red diesel that you no longer need, or that you won’t use before the 1st April 2022, Nationwide Fuels can help with our Fuel Uplift service.

We’ll attend your site and test your fuel’s condition – if it’s of high enough quality, we’ll be able reimburse you for the unused fuel and recycle it back into the red diesel supply network. If not, we can remove the redundant fuel from your site and either clean your tank ready for replacement fuel, or degas and decommission your tank.

Need help with your fuel needs? Call our team on 0330 678 0880 or check out our range of red diesel alternatives including HVO fuel.

Article updated in April 2022

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