Everything on Red Diesel Tax Changes | Commercial Recycling News

What you need to know about the red diesel tax changes

1st April 2022 will see changes to the red diesel taxation take place, which will affect many of the machinery that we use at our recycling centres. So what is changing and why does it matter? 

What is Red Diesel?

Red diesel is the fuel that is used in the UK typically for the construction and manufacturing industries. It has similar properties to standard diesel, but it is mixed with a red dye to help identify vehicles using this kind of fuel.

It’s illegal to use red diesel in vehicles on public roads and so is typically used in vehicles such as:

  • Tractors
  • Cranes
  • Forklifts
  • Commercial boats
  • Gritters

Who uses Red Diesel?

It is mainly industries that use this type of fuel, from agriculture to construction, mining and manufacturing. You often find places such as hospitals and data centres which have backup generators that rely on red diesel to provide power.

What are the current tax rules?

Currently, red diesel is taxed at a lower rate than white diesel, despite it contributing as much to greenhouse gases as white diesel when burned. Red diesel has a generous tax relief on it, with VAT being only 5% instead of the standard 20%, meaning that the rebated rate of duty for it is 11p per litre. This is compared to a duty rate of 58p per litre for white diesel.

The use of red diesel is also limited to certain industries. At the time of writing this, red diesel can be used for the following:

  • Heating and power of off-grid homes
  • Commercial buildings, grain dryers and animal sheds
  • Non-roadgoing or stationary engines, e.g. generators
  • Primary and back-up generators in hospitals and schools and in commercial buildings such as factories and data centres
  • Off-road agricultural machinery and vehicles
  • Seagoing and inland water boats, ships and barges
  • Rail, such as freight trains
  • Off-road construction machinery such as excavators, tipper trucks and JCBs

What’s changing?

The most obvious change is the price increase. As of the 1st of April 2022 the tax relief that is currently received by many industries will no longer be there.

Part of this change will also be limiting the industries eligible for the use of red diesel. As of April 2022, only 3 sectors will be permitted to use red diesel. These are:

  • Agriculture, forestry, horticulture and fish farming
  • Rail, including passenger and freight
  • Powering non-commercial heating systems (e.g. homes, narrowboats and religious buildings)

The use of red diesel for non-roadgoing and stationary machines will no longer be allowed. Meaning that we at Commercial Recycling will no longer benefit from the tax reduction.

Why is it changing?

As mentioned above, red diesel creates the same amount of emissions as the white diesel, meaning that its effect on the environment is substantial. With the present widespread use of the fuel, it is responsible for 14 million tonnes of CO2 released every year*.

The hope is that by introducing a higher tax, and reducing the number of industries eligible for the use of red diesel, more people will make a move towards using eco-friendly fuels. And any profit made from businesses moving to white fuel will be reinvested into green initiatives.

The regulation and tax changes are part of the initiative to get to net-zero carbon emissions by 2050.

At Commercial Recycling we are looking into alternative ways to fuel our machinery so that we can reduce our CO2 emissions and become a more eco-friendly business.

Changing from using Red Diesel

It won’t be as simple as using red diesel on the 31st March and then topping up with white diesel on the 1st April. The red dye used in red diesel stains the machinery, as this is how they tracked illegal use of the fuel. However, this means that machinery running on white diesel may still have the red dye in the interiors of the engines putting them at risk of being accused of illegally using red diesel.

But flushing out the fuel tanks is not the answer. In most cases, complete removal of red diesel traces is unnecessary. Yet, being able to prove the move away from red diesel will be important to avoid any false accusations. Keeping records of fuel purchases will help you with this.

The impact of this change

The biggest impact that this change will have is that people are likely to raise their prices, in order to be able to cope with the increase in price that they will be paying for fuel to run machinery.

Like most businesses affected by the change, you will notice a slight increase in our prices as of the 1st April 2022. Head over to our tipping price page to discover our prices.

What Commercial Recycling are doing about these changes

Over the next 12 months we will be investing in the infrastructure of our facilities. We are working towards using a hybrid system where our plants will run on electricity, but will have a fuel engine as a backup.

We are especially focusing on getting our inert recycling facility to run on electric as the screeners and crushers use the most fuel. This means investing in brand new equipment to replace the current plants that run on fuel, and making sure we can get the right amount of power to the facility via high voltage cables.

At the moment, mobile plants are slightly different as there aren’t many alternatives to diesel. Because of this we are looking to reduce the fuel we burn, rather than replace it. To do this we are investing in monitoring systems, so that we can watch the usage and idling times of each of our mobile plants. We then hope to change the habits of our drivers so that we save fuel.

In terms of what we are using to fuel the plants, we will be keeping an eye out on alternatives.

Looking to recycle more?

If you or your business are looking to send less to landfill and recycle more, get in touch with us to find out how we can help. Call us on 01202 579579, or email us at enquiries@avonmaterialsupplies.co.uk.


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