Preparing for the red diesel rebate changes

With the changes to red diesel entitlement coming up next April, and ahead of a broader analysis of the impact on the industry and your customers in the November issue of Fuel Oil News magazine, we speak with David Bryce, area sales manager at the IPU Group.

The group has been directly involved in the consultation process, with dialogue with HMRC, as well as with the final submission, and recently hosted a free webinar to share their understanding of the implications which was well received by attendees.

“From 1st April 2022, it will be illegal to put red diesel and other rebated biofuels into the tank of a vehicle, vessel, machine, or appliance that is not legally able to use it,” David explains. “Only the following sectors remain eligible to use red rebated diesel from April 2022:

  • Agriculture, forestry, horticulture, and fish-farming
  • Rail transport
  • Fuel used for non-commercial purposes – heating & power generation
  • Community amateur sports clubs (CASC) and golf courses
  • Sailing, boating & marine transport (excluding private pleasure craft in Northern Ireland)
  • Travelling fairs & circuses

“Those no longer able to use rebated fuels will be required to use diesel or biofuel on which the full duty has been paid.”

As yet, there is no finalised legislation document and, with the changes due to come into effect in April 2022, businesses have little time to be fully prepared despite the inevitable significant financial impact.

As David highlights: “There is absolutely no doubt that those forced to stop using red diesel will feel the financial strain. Jumping from 11.14 pence per litre for red diesel to 57.95 pence for white diesel is a hefty and noticeable jump. For a business using 150,000 litres of diesel per year, that’s a staggering annual increase of £70,215.

“It might be tempting for current users of red diesel to stock up and future proof  themselves for the next few years. However, fuel suppliers cannot:

  • Agree to customers stockpiling fuel
  • Agree to customers increasing usual order quantities
  • Sell large volumes of red diesel just before the cut-off date.”

In our conversation David also highlighted the issue with ‘pink diesel’: “The need for correct tank cleaning has never been higher. Sites, including the depot storage tanks of fuel oil suppliers, must be cleaned to remove all residue of red fuel. Not doing so could result in ‘pink’ diesel – a mix of white and leftover red diesel.”

Ensuring that all dye residue and contamination on tank walls has been removed will be incredibly important as “putting clean fuel into a dirty tank will only speed up the contamination process and deterioration of fuel – best practice is to maintain the cleanliness of your tank both before and after a fuel delivery.”

IPU knows that many are looking to HVO as a fuel alternative, but David reminds us that: “Despite HVO being a non-fossil drop-in diesel alternative, it still eligible for the full rate of duty.”

It is important to note, however, that, whilst HVO does not enjoy a UK duty concession despite its environmental credentials, its classification as a biofuel under the DfT legislation means that HVO counts towards fuel supplier renewable obligations for on-road and off road use.

David also notes: “Many may think that this newer, ‘cleaner’ fuel cannot fall victim to the same contamination problem found in diesel fuel storage – but it can.”

IPU is conducting an extensive, unbiased study with a focus on alternative fuels ahead of this rebate change.

Fuel stores will be a valuable target

The changes to red diesel entitlement mean that many businesses will also have to consider a higher level of protection for their fuel:

“Switching over to white diesel is going to turn your fuel supply into liquid gold. Just like you wouldn’t leave your car unlocked overnight, you need to keep your stored fuel protected.  Fuel tanks, particularly those above ground, at remote locations or unmanned sites, are prime targets for thieves.”

As a result, a fuel management system is something that many will now need to consider with the anti-theft monitoring, fuel condition monitoring and fuel level monitoring such a system affords.

IPU was directly involved in the consultation process and had an open dialogue with HMRC about the upcoming changes to red diesel entitlement and will be running a webinar on October 12th to give detailed information on the changes expected in April 2022.

They will give first access to the findings of their study, a copy of the white paper on the changes and will answer questions live to those directly engaged in the changes.

If you would like to find out more you can visit here or contact IPU on 0121 511 0400 or by email:

We look forward to hearing more on the subject of red diesel duty changes from all those involved across our industry in our ‘Industry Analysis’ in the November issue of Fuel Oil News.