From 1st April 2022, rebated diesel (known as red diesel) and rebated biofuels will no longer be allowed to be used as they are currently.
Red diesel and rebated biofuels are restricted to the following qualifying purposes:
• Vehicles and machinery used in agriculture, horticulture, fish farming and forestry. This includes allowing vehicles used for agriculture to be used for cutting verges and hedges, snow clearance and gritting roads
• vehicles designed to run on rail tracks
• for heating and electricity generation in non-commercial premises (homes and buildings churches, hospitals and town halls; off-grid power generation);
• amateur sports clubs Apart from the above exemptions you will no longer be able to use rebated fuel, you’ll need to use diesel or biofuel which the full rate of fuel duty has been paid for.
If you have any questions about these changes, contact the Red Diesel Entitlement Policy Team by email: reddieselentitlement@hmrc.gov.uk.
What do the rule changes mean in practice for the power generation sector?
You can only use rebated fuel for power generation in premises being used for non-commercial purposes.
What about stocks of rebated fuel?
You can use up your stock of rebated fuel after the rules change if you obtained and stored the fuel on or before 10 June 2021. The fuel can be used for any of the following uses:
• Contingency back-up electricity generation
Contingency back-up electricity generation means using back-up generators when necessary to make sure there is continuity of power. This does not include generators used as the main source of everyday electricity. It can also be commercial electricity generators, such as, those activated to manage pressures to the national grid and where a volume of back-up fuel is required to be held in reserve for security and regulatory purposes to maintain essential electricity supply.
• critical safety and environmental protection appliances in premises used for commercial purposes
If you have stocks of rebated fuel held to be used as contingency back-up which were obtained after 10 June 2021, or you cannot change from using rebated fuel for technical or safety reasons, you may be granted a licence by HMRC to continue using rebated fuel. To be granted a licence you will have to advise HMRC the quantity of rebated fuel still on hand at 1 April 2022 and you must pay the additional duty to bring it up to the full duty rate before using it up.
Any fuel obtained on or before 10 June 2021 for back-up power generation may be used up after 1 April without a licence and without payment of the duty difference.
In considering your request, HMRC will want to see that you have done everything possible to limit and manage down these residual stocks. They may ask to see records of your fuel purchases and use, as well as your stock balances, before making a decision.
What you need to do
If you have a large volume of rebated diesel already in reserve and are concerned that you will not be able to use or dispose of it before 1st April 2022, contact oils.policymail@hmrc.gov.uk you will need to provide the following information:
• The name of your company or business.
• The equipment the rebated fuel will be used for/in.
• The addresses or sites where rebated fuel is being stored.
• How much rebated fuel is currently stored at these premises
• How much rebated fuel you anticipate you will not have used by 1 April 2022.
• The amount of rebated fuel you had on hand at 10 June 2021.
• The amount of rebated fuel you had already ordered for this purpose on or before 10 June 2021, when that fuel was delivered and why the order could not be changed or cancelled.
• The dates and amounts of rebated fuel delivered into your storage since 10 June 2021.
• If you have placed orders that have yet to be delivered, the date the order was placed, the amount ordered and why the order cannot be changed or cancelled.
If you need to continue using rebated diesel after the rules change for technical or safety reasons, you will also need to provide the following:
• What machines you use rebated fuel in.
• How much fuel you use e.g., monthly or annually, in these machines
• Why full duty paid fuel cannot be used. You will need to provide evidence to support your request.
For detailed and updated information on the new legislation please visit https://www.gov.uk/government/publications/reform-of-red-diesel-entitlements/reform-of-red-diesel-and-other-rebated-fuels-entitlement
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