Major diesel changes being introduced in April will ‘punish’ drivers and hurt businesses

Fuel doctor examines car filled with 'contaminated diesel'

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From April 1, rebated diesel, sometimes referred to as red diesel, and rebated biofuels will no longer be allowed to be used as they are currently. People will only be able to use rebated fuels for specific purposes, including when using machines, vehicles, vessels and appliances.

For those who will no longer be able to use rebated fuel, they will need to use diesel or biofuel which the full rate of fuel duty has been paid for.

The rebated fuels affected by these changes are: rebated diesel, rebated Hydrotreated Vegetable Oil (HVO), rebated biodiesel and bioblend, kerosene taxed at the rebated diesel rate and fuel substitutes.

HVO is a liquid hydrocarbon which is classified for excise purposes as heavy oil and treated the same as diesel.

Fully rebated kerosene is unaffected by these changes and can be used for all heating uses.

From this date, it will no longer be legal to use red diesel for non-road mobile machinery such as bulldozers and cranes or to power mobile generators on construction sites.

Businesses should prepare for the change by running down stocks of red diesel in storage tanks and considering the cost implications of a move to “white” diesel, and whether these costs can be passed to customers or contractors.

According to the Government, red diesel use accounts for 15 percent of total diesel for the UK.

The reduced rate costs around £2.4billion a year in revenue compared to if duty was charged at the main rate.

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The Road Haulage Association has called on the Government to defer the withdrawal of the red diesel rebate by one year and take a phased approach to introducing it.

Rod McKenzie, director of policy and public affairs at the RHA, said: “UK hauliers have done a heroic job in keeping the economy running during the Covid crisis.

“Punishing them with a red diesel hike tax is damaging to their business and we urgently call on the Government to reconsider this move.”

They argued that it would lead to a £1.4billion hit to small hauliers and businesses if the changes were to go ahead in April.

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