When people hear the phrase red diesel, there is often a series of questions that take over with a haze of uncertainty that surrounds. Well, after reading this short write up, you will have clarity and know all there is to know about red diesel.
What is red diesel?
Red diesel is a rebated fuel, meaning that the VAT rate on it is a lot less than standard diesel. It is also known as gas oil, agricultural diesel, tractor diesel, cherry juice, cherry red, rebated kerosene, differ fuel, 35 seconds and generator diesel.
What vehicles can use red diesel?
Red diesel is used in many industries. Many people seem to think it’s just for farmers in tractors, but it’s used in construction, mining and many other industries in machinery and equipment. Data centres, transport companies and the public sector also use red diesel in backup generators.
In fact, all diesel-powered vehicles can run on red diesel, but it’s considered a tax evasion if you use it on the road.
Is red diesel illegal to use on-road?
Red diesel isn’t illegal to buy or use, as many people believe. Red diesel is a legal fuel if used in the correct applicants. It cannot be used in cars, trucks or any machines used for pleasure and on public roads.
Click here to find more info on the GOV website.
What colour is red diesel?
Red – it’s in its name after all! It’s simply added to make it more easily identifiable as red diesel. HMRC can then test for its use, they locate a marker dye within the fuel or tank and use dip testing.
Can red diesel damage my car?
No not at all, red diesel is exactly the same as white, except for the red dye that is added. All diesel engines can run on red diesel, but if caught you will be fined or prosecuted.
Can red diesel be made white again?
Yes, the red dye can be removed but it is illegal to do so. The complexity of the process varies and is known as fuel laundering. Penalties include going to prison.
Can I use red diesel in my tractor to grit the roads?
Yes, you can. In 2012, HMRC changed the law to allow tractors to use red diesel on public highways. When gritting the road, if you are tractors, light agricultural vehicles and agricultural material handlers, you can now use red diesel to do so.
Below is a history of rebated fuels: info below is provided by HMRC
What is the history of red diesel?
Until 1921, Customs Duty was charged on imports of motor spirits. On 1.1.1921 this was abolished and replaced with excise duty and vehicle licenses. Fire engines kept by local authorities, ambulances and road rollers were exempt. Rates applied to different vehicles appeared to have been assessed on likely damage done to roads. Diesel fuel was cheap as it was not considered to be a road fuel – cars and other road vehicles tended to run on petrol. Subsequently the use of diesel in lorries, buses and other road vehicles grew.
In 1934, local authority road and gully cleansing vehicles were exempted from excise duty on licenses. Rates for off-road vehicles were reduced.
Due to the growth in the numbers of diesel powered road vehicles, it was recognised that a separate rate for ‘off-road’ vehicles was needed. From 1935, road vehicles were forbidden to use rebated fuels – and penalties for such misuse were introduced to ensure equality between petrol and diesel engine road vehicles. Off-road vehicles benefited from the lower rate including railways, thus incentivising rail transport over road transport. This is probably where today’s concessions for rebated fuels originate.
The categories and uses of vehicle permitted to use rebated fuel was gradually added to over the years to reflect changes in machinery used and amount of road use.
- 1947 mobile cranes used only on roads as cranes given reduction in excise duty.
- 1949 tractors and other agricultural machinery, trench digging vehicles on public roads not hauling any load given special rates.
- 1950 concession extended to vehicles operating in woodland and to vehicles operating within fifteen miles of farms or woodland engaged in hauling between farms, estates
In 1952 legislation expressly stated that no road vehicles other road rollers and other specifically exempted vehicles were entitled to use rebated heavy oils. “In 1942, for the benefit of persons engaged in agriculture the rebate was restored to the pre-1935 position on heavy oils used as fuel for certain agricultural tractors and engines… There were several other war-time extensions…” The list of exempted vehicles included ploughing engines, tractors, agricultural engines, mechanical diggers, trenchers, mobile cranes and mowing machines.
In 1959 the list of exempted vehicles was further extended to include vehicles used solely for conveying road construction equipment, as well as vehicles passing from one part of land to another via roads. Auxiliary engines on vehicles allowed to use rebated oil (as a result of lobbying especially by concrete lorry operators). Emphasis was placed on the fact that vehicles licensed as goods vehicles were not exempted.
It was around this time that marking was introduced to allow oil to be sent out at a rebated rate for these off-road and exempted vehicles, rather than requiring users to reclaim duty paid. With the growth in the number of eligible vehicles and the growing differential between the price of road fuel and rebated fuel, the introduction of marking allowed Customs to identify rebated fuel and check for its use in road vehicles, and ensured the administrative burden was kept to a minimum by allowing users to buy at the lower rate.
The list of expemted vehicles was further expanded and refined, notably in the 1960s, adding snow ploughs and defining construction vehicles such as ‘works trucks’ and ‘dumpers’.
Schedule 1 to the Hydrocarbon Oils Duties Act 1979 (HODA) sets out the current list of ‘exempted vehicles’ (those that are allowed to use rebated fuels when using public roads in certain circumstances). The marking requirements are set out in Regulation 18 of the Hydrocarbon Oil Regulations 1973 (Currently being updated to include the new ‘Euromarker’ to be introduced from 1 August 2002).
European law requirements of red diesel
Directive 92/81/EEC sets out a number of areas in which Members States may apply reduced rates of excise duty.
- Article 8 (1) require Member States to exempt certain uses of oils from harmonised excise duty. These are: fuels not used as motor or heating fuels, aviation fuels, fuels used in ships in Community waters, other than private pleasure craft and blast furnace fuels.
- Article 8(2) allows Member States to apply reduced rates or exemptions in respect of electricity production, navigation of inland waterways, for passenger transport and freight, for pilot projects to develop environmentally friendly fuels, for development of aircraft and ships, for use in agriculture, horticulture and fisheries, and; for dredging.
- Article 8(3) allows Member States to apply reductions in excise duty on gas oil for vehicles intended for use off the public roadway and in respect of construction and public works vehicles.
Oils for such uses must either be released at full duty rate and the difference reclaimed by the end user OR must be marked before release at the rebated rate. The introduction of the Euromarker means that all oil used in off-road and exempted vehicles must be marked with Solvent Yellow 124.
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