Red diesel is illegal for most road vehicles because it is taxed at a lower rate and intended only for specific off-road uses. It contains a red dye to distinguish it from regular diesel, helping authorities detect misuse. Using red diesel in cars, vans, or Lorries on public roads is considered tax evasion and can lead to heavy fines, vehicle seizure, or prosecution.
Red diesel is a special type of diesel fuel that is dyed red to indicate it can only be used off-road. It’s often used in farming machines, construction equipment, and other vehicles that are not driven on public roads. Using red diesel in vehicles that do go on the road is illegal because of tax implications and environmental rules. The differentiation between red diesel and regular diesel is crucial, as it helps ensure that taxes are correctly applied to fuels used in road vehicles. Understanding the reasons behind the illegality of red diesel usage not only highlights the importance of tax compliance but also sheds light on environmental considerations that play a significant role in fuel regulations.
What Is Red Diesel?
Red diesel, often referred to as gas oil, is a red-coloured fuel mainly utilised for off-road vehicles and equipment. It is especially popular in industries like construction and agriculture, where users can receive a tax rebate on the fuel they purchase. While red diesel looks like conventional white diesel, it is infused with a red dye and specific markers to deter unlawful usage on public roads vehicles.
One of the main reasons red diesel is preferred by many is its cost-effectiveness. The lower tax rate on this fuel makes it a practical choice for businesses that rely on off-road machinery and vehicles. Farmers, construction firms, and marine operators benefit from reduced fuel costs, allowing them to remain competitive in their respective industries.
Environmental Concerns about Red Diesel
While red diesel offers financial advantages, it is scrutinised for its environmental impact. The red dye in diesel serves as a marker, showing it is not intended for public road use. Nevertheless, instances of misuse have occurred, with certain individuals exploiting red diesel for use in road vehicles to benefit from the reduced tax rate. The combustion of red diesel releases pollutants that contribute to environmental pollution and global warming. As the focus on environmental sustainability and reducing carbon footprints increases, the inappropriate use of red diesel has become an essential topic of discussion.
The Banning of Red Diesel
In April 2021, the UK government enforced a ban on the use of red diesel on roads. This decision shifted from the previous tax breaks to specific industries. The ban on red diesel received mixed reactions, as industries that heavily relied on this fuel expressed concerns over the potential increase in operating costs.
Changes in UK Red Diesel Rules
Starting April 1, 2022, new UK laws require many individuals and businesses that use red diesel (rebated fuel, gas oil, or tractor diesel) to switch to the more expensive white diesel, which costs more due to full fuel duty rates. From April 1, vehicles and equipment in the UK, especially in commercial sectors, will not be allowed to use red diesel. Using red diesel in any vehicle or machine that doesn’t meet the new rules will be illegal. Switching to white diesel is expected to increase fuel prices by about 47p per litre for many businesses nationwide. The new laws might have a significant effect, as companies could raise their prices to cover higher fuel costs. According to the latest UK government guidelines, modifying machinery and fuel tanks for red diesel will also be limited, particularly in farming and forestry.
Starting April 1, many businesses in the UK, including construction, plant hire, and recycling, must switch to white diesel immediately; failure to do so could lead to hefty fines. While red diesel won’t be banned or face price increases, its usage will be legally restricted for most businesses that previously relied on it, particularly in the commercial sector.
Reasons for the Banning of Red Diesel
Several reasons led to the decision to ban red diesel for most uses. One significant reason was to support the government’s efforts to reduce carbon emissions and promote a greener economy. By phasing out red diesel, industries across the UK were encouraged to use cleaner fuels in agricultural vehicles and equipment.
The ban also aimed to prevent tax evasion and the misuse of red diesel. Over time, the red dye that marked red diesel became less effective, increasing illegal use on public roads. The ban sought to stop this unlawful usage and ensure that businesses paid the correct taxes based on their fuel consumption.
- Environmental Concerns: Red diesel, marked with dye for lower tax, significantly contributes to carbon dioxide emissions and pollution. It leads to climate change and worsens air quality.
- Meeting Climate Targets: The UK government aims to reduce greenhouse gas emissions, and limiting red diesel use is part of this strategy.
- Promoting Cleaner Alternatives: The ban encourages businesses to switch to white diesel, renewable options like HVO, or to use electric power.
- Levelling the Playing Field: The lower tax on red diesel has given some industries an unfair advantage. The ban aims to balance fuel costs across different sectors.
- Discouraging Illegal Use: While not the main reason, the red dye helps indicate legal use of red diesel. Without it, catching illegal use in vehicles on public roads becomes harder.
Impact of the Ban on Red Diesel for Businesses
In 2019, the UK government presented its plan to become carbon neutral by 2025, aiming to cut contributions to climate change. At that time, this was one of the most ambitious timelines proposed by any country worldwide. Since then, the government has introduced various policies to support a carbon-neutral future. Changes to tax rules for industries that use red and white diesel aim to encourage the use of cleaner alternative fuels.
The ban on red diesel significantly impacted several industries in the UK, including the agriculture, construction, and marine sectors, which usually relied on this fuel. The higher fuel costs hurt many businesses’ profits and competitiveness.
However, the ban on red diesel also encouraged innovation and changes in these sectors. Companies began looking for alternative fuel sources, investing in more efficient machinery, and adopting sustainable practices. This push towards sustainability has sparked positive changes in industries that depended heavily on red diesel.
Who Can Still Use Red Diesel & Other Rebated Fuel?
The UK government has set rules for using red diesel and cheaper biofuels, allowing them only for specific purposes:
- Vehicles and machinery used in farming, gardening, fish farming, and forestry. This includes agricultural vehicles that can cut grass along roads and clear snow or spread salt on roads.
- Powering passenger, freight, or maintenance vehicles on rail tracks.
- Heating and providing electricity for non-commercial properties like homes, hospitals, places of worship, and town halls; generating off-grid power; and supporting non-propulsion needs on permanently moored houseboats.
- Supporting community sports clubs and golf courses, including maintenance and heating/lighting for clubhouses and changing rooms.
- Fuelling marine vessels operating in the UK, excluding private pleasure boats in Northern Ireland.
- Powering machinery (like caravans) at travelling fairs and circuses.
