Red Diesel Eligibility: 2020 Budget Taxation Changes (2023)

The government has proposed a change in red diesel eligibility which will restrict the use of red diesel in most sectors from 1 April 2022.

The UK is serious about tackling climate change. It is paving the way to a greener future and is at the forefront of global environmental commitments. Incentivising red diesel users to invest in cleaner alternatives through its tax system is just one of the measures being implemented to help achieve its 2050 net zero carbon target.

Businesses that will lose their red diesel entitlement are advised to replace existing fuel stocks now, while the red diesel market is still strong. Our engineers can clean your tank and remove any remaining rebated fuel to ensure it’s compliant before 1st April 2022.

Current Government guidance advises that from March 2022, fuel suppliers will not be able to supply red diesel to customers whom it suspects will not use the fuel before April 2022. Therefore businesses will see an increase of 45.81ppl in their fuel costs as they will be required to switch from red diesel to DERV and pay the additional duty.

As the deadline approaches, red diesel values are falling by as much as 10% every month. Switch your fuel stocks now to get the maximum return for your unusable assets.

Red Diesel Eligibility: 2020 Budget Taxation Changes (1)

What is red diesel?

Red diesel, also commonly referred to as gas oil, is used solely for off-road purposes, such as within the construction, marine and agricultural sectors.

Despite diesel is one of the least environmentally friendly fuels, so users currently pay a duty rate of 11.14 pence per litre (ppl) which is considerably less (46.81ppl) than those using regular diesel (57.95ppl), effectively giving it an 81% discount.

Essentially, this means that red diesel users are paying less than single-car owners for the harmful emissions they produce, even though the emissions released from using 1 litre of diesel are largely the same.

This rate has been in place since 2010 because of the 10-year freeze on diesel fuel duty. Since 1961, gas oil contains a red dye to identify it from regular diesel (hence red and white diesel). This enables law enforcement agencies and HMRC to identify illegal use due to the duty difference.

Read our Red Diesel FAQ for a deep dive into the rebated fuel.

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Who can currently use red diesel?

  • Commercial and domestic heating users, such as off-the-grid homes, grain dryers and animal sheds
  • Stationary engines, such as in generators to provide back-up power in large commercial buildings. hospitals and data centres
  • Mobile machinery, such as transport refrigeration units
  • Boats and ships operating at sea or on inland waterways
  • Rail, such as freight trains
  • Off-road construction machinery, such as excavators, tractors and JCBs

Red diesel budget 2021

The government has recently announced that it will remove the entitlement to use red diesel from most sectors from April 2022. As a result, businesses will have to use fuel that is taxed at the standard rate for white diesel in order to reflect the damaging environmental impact of using the fossil fuel more fairly and to encourage users to switch to more environmentally friendly fuels.

What sectors remain eligible for red diesel?

The sectors that will remain eligible for red diesel use from April 2022 are:

  • Agriculture, forestry, horticulture, fish farming
  • Railways
  • To power non-commercial heating systems such as in homes, narrowboats and places of worship
  • Commercial boating industry, including fishing and inland water freight industries and passenger ferries
  • Non-commercial power generation, such as hospitals and off-the-grid households
  • Travelling funfairs and circuses
  • Amateur sports clubs, including golf courses

The government acknowledges the significance of red diesel to the agriculture sector, and likewise forestry, horticulture and pisciculture. All three sectors are closely linked to agriculture, so they are likely to be treated unanimously.

In addition, removing the red diesel entitlement for passenger or freight journeys runs the risk of creating contradictory environmental outcomes, such as pushing passengers to increase their reliance on roadgoing transport such as coaches, cars and lorries due to costs incurred.

The government says it will review the use of red diesel in rail once more viable alternatives become available.

Likewise, banning red diesel for domestic heating users would hugely increase heating bills, particularly homeowners who are off-the-grid with no alternative and those who are considered to be vulnerable.

Why is red diesel being banned for some industries?

Red diesel accounts for around 15% of diesel consumed in the UK and is responsible for approximately 14 million tonnes of CO2 released into the atmosphere every year.

It is estimated that red diesel in the construction and infrastructure building sectors caused 7% of NOx emissions and 8% of PM10 emissions (a type of particulate matter) in London during 2018 alone.

The thought behind the red diesel ban is that more expensive diesel will provide businesses with the motivation to improve the energy efficiency of their business operations and seek more environmentally friendly alternatives.

Why are the changes not coming into effect until April 2022?

While this decision is putting the UK on the right road for its environmental goals, the government recognises that this will be a huge challenge for many businesses. Therefore, the delay is to give businesses the time to prepare before any changes come into place.

Red diesel consultation period

In addition, the government implemented a consultation period that ran between July 2020 – 1 October 2020 to give red diesel users the opportunity to voice their concerns about the change in red diesel eligibility.

Governing bodies will evaluate all responses and consider any claim made by a sector to retain their red diesel entitlement. It will publish a summary of responses within 3 months of closing and will propose the steps later this year.

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HMRC will then publish draft legislation for consultation in 2021.

Existing duty reliefs

The government has not proposed to change any existing fuel duty reliefs which give specific sectors 100% relief on fuel duty, even where these relate to using fuel in sectors which will no longer be permitted to use red diesel.

This includes commercial boats operating within the limits of a port or at sea, such as ferries and fishing boats will remain entitled to the Marine Voyages Relief, whereas the General Lighthouse Authorities and the Royal National Lifeboat Institution will continue to benefit from full relief from fuel duty even when switching to white diesel from 1 April 2022.

Nonetheless, they will have to pay the standard 20% VAT rate that applies to diesel instead of the reduced 5% rate of VAT that red diesel supplies of up to 2300 litres are subject to.

To support the development of alternative diesel sources, we call on the government to reduce the cost of renewable substitutes such as HVO (Hydrotreated Vegetable Oil) to reduce the price barriers and increase the availability of the fossil-free fuel sooner.

Private pleasure craft

Private pleasure craft users are currently permitted to use red diesel for propulsion and non-propulsion use. However, they must pay white diesel rates for the fuel used for propulsion.

At Budget 2020, the government announced that it would include allowing legislation in the Finance Bill 2020 to ban red diesel in propel private pleasure craft, with the specifics on the implementation to be set out in the near future.

This will achieve uniformity with a 2018 judgment by the Court of Justice of the European Union (CJEU) and ensure the UK meets its global obligations. This will not affect private pleasure craft users’ right to use red diesel for non-propulsion.

Once implemented, private pleasure craft users must use white diesel for propulsion in place of red diesel. This will not affect the fuel duty rate paid on fuel used for propulsion as private pleasure craft will already be paying the standard white diesel rate for this fuel.

The government recognises that this will cause many challenges for private pleasure craft, so it has been consulting with users to understand how they will implement the changes. The government has yet to announce when these changes will come into force.

Red diesel in private pleasure craft for non-propulsion uses

Private pleasure craft will still be permitted to use red diesel for non-propulsion uses, such as for:

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  • Heating
  • Lighting
  • Powering appliances

However, if they only have one fuel tank on board, they must use white diesel for all purposes.

2020 budget changes to tax on rebated biofuels

Neat biodiesel and biodiesel blended with gas oil for non-road use are also currently subject to a rebated duty rate of 11.14ppl. The government announced at Budget 2020 that it would also scrap the application of reduced rates to biofuel from 1 April 2022, like red diesel.

What does this mean?

Biodiesel for non-road use and that blended with gas oil for non-road use will also be subject to the standard biodiesel road duty rate (currently 57.95ppl), except for those sectors that will retain their entitlement to use red diesel.

These changes will apply to those who use biodiesel and biodiesel blended with gas oil for heating:

  • Commercial heating use will be subject to the standard biodiesel road fuel duty rate
  • Non-commercial heating use will be subject to the rebated duty rate of 11.14ppl

The changes are intended to ensure that the duty paid on diesel and biodiesel for non-road use remains aligned.

Ensuring compliance for red diesel users

Sectors that are set to lose their red diesel entitlement can switch to white diesel. However, the chemical markers (dye) used in red diesel is designed to linger in fuel tanks and pipes. This could cause the authorities to think that anyone who has legally purchased white diesel has misused red diesel previously.

Fuel suppliers

To reduce the risk of this occurring, the government proposes fuel suppliers replace fuel tanks or flush out tanks and pumps until no trace of the rebated fuel remains in anticipation of the red diesel tax changes.

It recognises that this will incur a cost to fuel suppliers, but it will be a huge help to HMRC to aid compliance and detect any misuse of red diesel.

Fuel distributors will also have to police the use of red diesel going forward and ensure that all fuel supplied to a sector losing entitlement uses all low tax diesel ahead of this date.

Fuel users

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The government doesn’t propose red diesel users to flush out the tanks of their vehicles and/or machinery due to the cost involved. This will also avoid damage to the environment that could arise from the unsupervised and unsafe disposal of red diesel.

The penalties for using red diesel after 1 April 2022

To ensure compliance, red diesel users must run down existing stocks of red diesel before 1 April 2022. If vehicles and machinery are found with red diesel marker in fuel supplies after this date, they could be seized, as well as the fuel.

While it’s considered a criminal offence, the user will have the opportunity to appeal if they believe they are still authorised to use the gas oil. Fuel used in sectors that are no longer eligible will be liable for fines.

How can Beesley Fuels help?

Beesley Fuels can help you replace your red diesel and find the most productive and cost-effective solution. We offer a complete solution, including full consultancy and advice with all your needs.

We can buy back your red diesel

We can remove and buy back your red diesel, giving you the opportunity to sell at the best possible price before rates plummet further.

We can handle all aspects of tank safety to ensure your tank is compliant with all relevant standards, including:

  • Fuel upliftof rebated stock & buyback rebated fuel
  • Tank clean if required
  • NDT tank inspectionif over 10 years old
  • HVO fuelsupplied at competitive rates with excellent credit terms available

HVO fuel is a drop-in alternative to diesel

While the proposed red diesel ban brings many challenges for the sectors involved, we are here 24/7 to provide support and advice on how to overcome these hurdles.

HVO fuel is a synthetic diesel alternative produced from renewable raw materials. FAME and fossil-free, HVO is a pure paraffinic hydrocarbon that does not contain the aromatic compounds which are present in conventional diesel.

It adheres to both the EN 15940 and ASTM D975 specifications, so it can be used as a drop-in diesel replacement which means you don’t need to make any modifications to your engines or their peripherals.

HVO has been approved by the majority of OEMs and is supported by all major engine manufacturers, causing zero impact on equipment and vehicle warranties.

The low cost of red diesel has previously created a barrier for alternative fuels, so we hope the ban will create a more competitive green fuel market and bring down the prices of renewable fuels such as HVO fuel.


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Information accurate at the time of writing (June 2021).


Red Diesel Eligibility: 2020 Budget Taxation Changes? ›

At Budget 2020, the government announced that from the 1st April 2022, it will remove the entitlement for most sectors to use red diesel

red diesel
Red diesel (also known as gas oil, tractor diesel, cherry red and agricultural diesel) is a low-tax and therefore low-cost fuel that is widely used to operate registered off-road vehicles and permitted machinery. It can also be used to heat homes. › faqs › red-diesel-faq
, with the exception of agriculture, horticulture, fish farming, forestry, rail and non-commercial heating system users.

Why is red dye diesel not taxed? ›

By law, red-dyed gas is only for use in off-road vehicles, including farm tractors, heavy construction equipment, and generators, where higher sulfur fuel use is permissible. Because it is not to be used for on-road vehicles, this fuel is not taxed within the United States.

Can red and white diesel be mixed? ›

White diesel can also be mixed with red diesel fuel currently in your tanks, as they are chemically identical and will pose no risk to your equipment.

Does cat litter clean red diesel? ›

Removing the dye from red diesel can be done in a variety of ways, but the most common methods are filtration using cat litter as a filter material, or washing red diesel with sulphuric acid and other chemicals.

What is the alternative to red diesel? ›

On the 1st April 2022, rebated fuels such as Red diesel and biofuels, will no longer be able to be used as they are currently. The majority of Red diesel users will need to use an alternative fuel with White diesel and HVO being suitable alternatives to consider.

Is there federal tax on dyed diesel? ›

How much tax do we pay on a gallon of gasoline and on a gallon of diesel fuel? Federal taxes include excises taxes of 18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel fuel, and a Leaking Underground Storage Tank fee of 0.1 cents per gallon on both fuels.

How much does a gallon of red dye diesel weigh? ›

What is the weight of diesel fuel? The weight of a gallon of diesel is about 7 pounds, roughly. Diesel weighs a little less than 7 pounds per gallon in the US (and a little more than 7 pounds per gallon in Canada), but let's go with 7 pounds per gallon to make it an easy, round number.

How long can red diesel be detected? ›

Since the red dye and chemical markers added to red diesel are highly detectable even in small amounts, it's likely that your tank will retain traces of it for months to come.

Is kerosene the same as red diesel? ›

There are two types of heating oil – gas oil and kerosene. Gas oil (also known as red diesel and 35-second oil) is generally for commercial and agricultural use. Kerosene (also known as home heating oil or 28-second oil) is a lighter oil that is used in many homes.

Why is pink diesel illegal? ›

It is illegal to used dyed diesel fuel in licensed trucks or automobiles that drive on public roads. Since fuel taxes are used to build and maintain roads, illegal use of dyed fuel denies the government of taxes needed for roads. It is a misdemeanor to improperly use dyed diesel fuel.

Does red diesel clogging filters? ›

Wax paraffin formation – crystals begin to form when red diesel becomes too cold and amalgamate which block the fuel filter. This will cause the engine to fail or stop due to fuel starvation. Contamination – when the temperature drops water can form in the fuel which can clog filters and also cause engine problems.

Can you mix red and clear diesel? ›

There are no issues with mixing the two types of diesel fuels, although red usually has a higher sulfur content than green. Also – it's called green fuel because it's eco-friendly. It's actually either light green or clear in color.

Is red diesel worse for the environment? ›

Red diesel is different from white or “road” diesel in two ways: its colour, and the rate at which it's taxed. Chemically, the two fuels are identical, and release identical levels of greenhouse gasses when burned. Its colour is changed through the use of a red dye that's used to differentiate it from unrebated fuel.

Can red diesel damage injectors? ›

Red diesel won't damage your car as it's the same fuel as white diesel, just with a red dye added.

Why is red diesel less expensive? ›

Red, dyed diesel is not taxed the same way, and as a result, is cheaper. Because dyed diesel is used off-road on farms and in agricultural settings in generators, backhoes, excavators, forklifts, reefers, and other heavy equipment, state and local taxes for highways do not apply.

Does red diesel gel up? ›

All diesel fuels will gel if it gets cold enough. Both a formation of wax crystals and ice forming in your fuel will obstruct filters and take your equipment down. Rule of thumb: with no treatment your diesel fuel should operate without any issues above 20 degrees F.

Can you run red diesel during a pandemic? ›

In some instances, usually when a state of emergency has been declared by the state or federal government, dyed diesel can be used. It can also be used if the regular fuel supply has been disrupted due to a natural disaster. It is best to check with your specific areas guidelines.

What is the federal fuel tax rate in 2023? ›

In 2023, the state plans to phase the tax back in by $0.05/gal per month until the full $0.25/gal gasoline tax is restored by May 1, 2023. Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel.

What is the federal biodiesel tax incentive? ›

Qualified biodiesel producers or blenders are eligible for an income tax credit of $1.00 per gallon of pure biodiesel (B100) or renewable diesel produced or used in the blending process. Re-blending of blended biodiesel does not qualify for the tax credit.

Is red diesel #1 or #2? ›

2 diesel that most owners and enthusiasts are familiar with. From a composition and chemical standpoint, red diesel (it's actually called "Cherry Juice" in some places), is exactly the same fluid as No. 2 fuel that's used in the trucks, buses and some cars on our roads.

How heavy is 100 gallons of diesel fuel? ›

We like to round off the weight of diesel fuel, just to make it easier. Use the round figure of 7 lb. per gallon, when calculating the weight…. One hundred gallons = 700 lbs.

How much cheaper is off-road diesel than regular diesel? ›

Off-road diesel costs 10-25 cents less than highway diesel, and the average cost today is between $5.00-$5.15. Off-road diesel fuel cannot be purchased at a regular gas station because it's prohibited for road use.

How do you turn red diesel clear? ›

One of the most common is to remove the red coloration from the diesel. In the UK, a diazo dye — Solvent Red 19, 24 or 26 — is used to colour the diesel. Fraudsters can remove the colour using an acid or alkali which renders the dye colourless, or by stripping the dye from the diesel using activated carbon.

Why are they getting rid of red diesel? ›

​Why is this happening? ​This change to the red diesel rules is part of the Government's 2050 net-zero decarbonisation plan. It's aimed to encourage the wider use of white diesel and greener fuels by the commercial sector, especially in mining, quarrying, construction, plant, logistics, leisure and highway maintenance.

Why can't truckers use red diesel? ›

Why is using red diesel in my truck illegal? The government is strict regarding the use of this product, because criminals avoid paying taxes on standard fuels. Some groups do this by removing the red dye from the fuel and selling it to unsuspecting motorists.

Can I burn kerosene in my diesel truck? ›

Kerosene will burns fine in most diesel engines without harming them. In fact, many newer diesel engines list kerosene as an approved fuel. Kerosene is made from a distilling process that makes it a pure fuel. This means that it has no additives like diesel does.

Why is it called 28 second oil? ›

The term '28-second oil' is used as a term to distinguish kerosene's viscosity, through a specific test of how long it takes 50ml of the oil to drip into a beaker. This also explains how red diesel gets its '35-second' name.

What burns hotter kerosene or diesel? ›

The paraffin/wax content is higher in diesel, and it produces more BTUs (heat) than Kerosene. Kerosene, however, is often used in very cold temperatures, as it doesn't thicken as easily as diesel under these conditions.

Will diesel trucks ever be banned? ›

California regulators on Friday voted to ban the sale of new diesel big rigs by 2036 and require all trucks to be zero-emissions by 2042, a decision that puts the state at the forefront of mitigating national tailpipe pollution.

Will diesel ever be banned? ›

California state regulators approved on Friday a ban on the sale of new big rigs and buses that run on diesel by 2036, going beyond the federal government in issuing requirements to reduce emissions and setting the stage for other states to follow suit.

What is green diesel? ›

Renewable diesel is made from responsible and sustainable feedstock, such as used cooking oil, rendered animal fats and inedible corn oil. It is molecularly the same as petroleum-based diesel and it meets the ASTM International's standard for Diesel Fuel Oils (D-975).

Why does red diesel look blue? ›

Because it is not supposed to be used for on-road purposes, this fuel is not taxed within the United States. Diesel that is designated for use by U.S. government vehicles is dyed blue instead of red.

Does red diesel have more sulfur? ›

Red-dyed diesel contains a higher sulfur content than clear diesel. Because it is not to be used for on-road vehicles, this fuel is not taxed within the U.S. Blue-Dyed diesel – Blue-dyed diesel is identical to red-dyed diesel, except that it is used in U.S. Government vehicles only.

How long does red dyed diesel stay in your tank? ›

The red dye will be detectable in your tank for up to six fills before it is so diluted that it cannot be seen. Depending on how low you let the tank get, it could be less. In twenty years of driving very obvious diesel trucks I only got dipped once. So I'd say you probably have nothing to worry about.

Why is off-road diesel cheaper? ›

Because it's not used in vehicles driven on roads, off-road diesel is not taxed and is cheaper than on-road diesel. However, because on-road diesel is driven on public roadways, it is subject to an excise tax.

What color is farm diesel? ›

Red – used for off-road. Mainly for construction and farming. Because it's tax-free, it's dyed red for easy detection. Green – it's not really the color green.

Is farm diesel the same as regular diesel? ›

There is no chemical difference between on-road and off-road diesel fuels. On-road diesel, also known as clear diesel, can be purchased at the local gas station. Off-road diesel is dyed red and is sold through bulk distributors. The only differences are in the color, cost, and intended use.

Does red diesel stain your engine? ›

The purpose of diesel dye is to facilitate dip testing, whereby the vehicle tank is dipped and tested for red diesel. Using dyed diesel fuel stains the fuel tank and many of the engine's components which come in to contact with the fuel.

What is the most eco friendly diesel? ›

HVO is a renewable diesel made from residual waste, which means that it has significantly less impact on our environment.

Does red diesel smell different? ›

Does Red Diesel Smell Different Than Regular Diesel? No, Red Diesel is the same fuel as Regular Diesel. The only difference is the red dye and the cost. So, Red Diesel and White Diesel smell the same.

Why is red dye diesel illegal? ›

Why is red diesel illegal? Red diesel is illegal for on-road vehicles because it's not taxed. Federal and state governments have strict standards in place about its use in on-road engines. Distributors and fuel retailers cannot knowingly supply on-road vehicles with this type of fuel.

Why can truck drivers use red dye diesel? ›

The red dye indicates that the fuel isn't taxed as highly, at the local (state) and/or federal level, as road-going (clear) fuel is. Red diesel is heavily rebated, which is another way of saying it is taxed significantly less than the fuel you find at your local filling station.

Is dyed diesel taxable in Texas? ›

Dyed diesel is tax exempt and may be used for limited purposes. Construction equipment, reefers, agricultural equipment, generators, and refrigerators can be powered by this diesel. You should not use dyed fuel for any unauthorized purpose, or you could be subject to extensive fines and back-taxes.

Is red diesel going away? ›

Many sectors will no longer be entitled to use “red” diesel and rebated biodiesel from 1 April 2022. The change is due to new government rules to help meet climate change and air quality targets.

Is red diesel lower quality? ›

Red diesel is a lower tax fuel than regular diesel that's used widely throughout the UK. It has the same physical properties as regular diesel (except its colour, of course).

Is red diesel better for your engine? ›

Can Red Diesel Damage Your Engine? No, it can't. It's the same as on-road diesel except for the dye. If you have a diesel engine, it can run on farm fuel.

Can I put diesel 2 in my truck? ›

Diesel #2 is used for trucks that carry heavy loads, while diesel #1 is used for regular driving. Truckers should use diesel #2 because it's the best option for driving long distances at consistent speeds. Diesel #2 is also less volatile and gives better fuel economy.

Can you use red dye diesel in a state of emergency? ›

There are situations where off road diesel fuel can be used on public roads. In some instances, usually when a state of emergency has been declared by the state or federal government, dyed diesel can be used. It can also be used if the regular fuel supply has been disrupted due to a natural disaster.

Can you run red diesel in a 6.7 Powerstroke? ›

Yes, it's usually completely safe to run red diesel (off-road diesel) in a 6.7 Powerstroke. Red diesel is the same as regular highway diesel, apart from a red dye.

Can you mix diesel 1 and #2? ›

#1 and #2 grade fuels can be mixed at the same time. This means you don't have to worry if #1 grade is only available during the winter months.

How many gallons of diesel can you legally transport in Texas? ›

(e) Diesel fuel transportation units must transport no more than 500 gallons of diesel fuel at a time.

Can you run red diesel in a farm truck in Texas? ›

Dyed diesel fuel is only meant for construction equipment, generators, reefers or refrigerators, and agricultural equipment. From losing your job to being charged sky-high fines, there are ample reasons you should not risk using red dyed-fuel in anything but your off-road vehicle.

What happens if you get caught using dyed diesel? ›

If you do get caught running off road diesel you can face a hefty fine. Many states level a $1,000/gas tank minimum fine. These same states charge $10/gallon instead if that's a greater fine. That is before any federal tax evasion penalties.


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