25th July, 2021
Tax exempt red diesel can help your company cut down on fuel costs by up to 81%.However, it’s important to double-check that your vehicles and equipment are applicable because misusing this diesel can lead to serious consequences.
Below is an outline of which vehicles and machines are eligible.
Red Diesel is simply normal diesel with red dye added. This is done to easily differentiate it from normal diesel because it comes with various tax exemptions which make it much cheaper to buy – by about 81%! It’s mainly used by owners of off-road untaxed vehicles, either in construction or in the industrial and agricultural sectors. According to gov.uk, in 2017 it made up 15% of total annual diesel usage and this saved its users around £2.4 billion compared to full duty charges.
This special type of fuel is dyed red so HMRC can quickly and accurately identify it where it isn’t meant to be used. Misusing this oil type by trying to remove its red dye will be classed as fuel laundering and can lead to a prison sentence.
Until recently, red diesel wasn’t allowed on public roads under any circumstances which was problematic for farmers who wanted to grit their roads, seeing as councils can only grit main public roads. Demonstrating that rules and regulations around red diesel are ever-shifting, in 2012 HMRC allowed three types of agricultural vehicles (tractors, light agricultural vehicles, and agricultural material holders) to use red diesel when gritting the roads.
Since then, farmers are now allowed to use these vehicles if their land is split up and divided by public roads – so long as no more than 1.5km is travelled on public roads using red diesel.
Similar to farming, there’s a lot of driving required in the industrial and construction sectors. Whether you need it for your forklift, bulldozer, crane, or power generator, red diesel will help keep your fuel costs down.
In fact, quite a broad range of vehicles, and some non-vehicles, are eligible to use red diesel:
From fuelling freight trains, to providing backup power for generators, to fuelling mobile refrigeration units and, ironically, tools that drill for oil.
Heating oil used to be a larger source of demand for red diesel before natural gas usage increased. That being said, it’s still used in a variety of commercial and public sector premises and in agriculture for heating animal sheds and various processes like drying grain. It’s also used as household heating even though this is gradually being phased out.
Red diesel has a broad range of uses and supports companies in a variety of sectors. It’s vital for helping these companies to keep their costs down but it’s also a privilege which mustn’t be abused. This guide has outlined what sectors, vehicles, and machines are eligible to use the fuel to make sure you’re not caught out.
For more information on red diesel, or to find out about our other services, including Kerosene delivery and home heating, don’t hesitate to get in contact with D & S L Fuels and Lubricants by calling us on 01482 898 462 today!