Changes to red diesel usage

27 Apr 2022

By Lee Jones, Senior Accountant in the Rural Services Team

The rules changed on the use of red diesel from 1 April. The good news is that if you are using rebated fuel for agriculture then it is likely you can continue. Red can be used for Agriculture, horticulture, fish farming and forestry. White diesel will be the only option available to use for non-agricultural industries, this includes off-road use in vehicles or equipment. This raises the key question of what is agricultural for these purposes…

HMRC deems agricultural as “the growing and harvesting of crops for food, beverages, fodder, fuel or industrial purposes; or the rearing of animals for the production of food, wool, leather, fur or other substances”. Therefore, it is important to note that certain activities are excluded from what could perhaps be considered ‘agriculture’:

Excluded activities include:

  • Rearing of animals that are bred for sport or recreation. Shoots will therefore not qualify, and case law suggests that game farms may be caught as well

  • Dealing in agricultural products

  • Landscaping

  • Peat or loam extraction

  • Exploitation of wild animals or fish stocks

  • Construction of agricultural buildings is excluded, but where does this leave farmers constructing their own?

  • Transporting animals or agricultural products will only qualify if this is incidental to an agricultural operation.

There are a small number of other non-agriculture circumstances where red diesel can be used, such as hedge cutting on roads, clearing snow, gritting and assisting of flooding clear up. But be careful on the last point as flood protection would be a category where red diesel cannot be used!

At a time when fuel costs are soaring, the Chancellor’s rather lacklustre 5p fuel duty cut for white and 0.96p for red feels like a drop in the ocean. With huge inflation for agriculture, keeping costs to a minimum is clearly a key focus but using the correct diesel is crucial so that fines can be avoided.

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