New red diesel laws force businesses to call for ‘tax rebates’ on fuel

Thousands of diesel cars might need repairs under proposed law

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From today, April 1, rebated diesel – which is also referred to as red diesel – and rebated biofuels will no longer be used as they are currently. This is expected to hammer industries which rely on the fuel including farming, agriculture and construction, with estimates showing some could lose thousands of pounds per year.

Andrew Lloyd, Chief Operating Officer at Intelligent Growth Solutions, highlighted the impact the rebate will have on businesses around the UK.

He said: “In continuing to entitle the agriculture industry to use rebated diesel, the Government has recognised that farmers need support both with energy pricing and with their green transition.

“More is being asked of British farmers as we look to grow more produce closer to home in reaction to challenges to long-established supply chains as a result of COVID-19, Brexit and the ongoing war in Ukraine.

“While continued access to red diesel and the efficient use of it as a fuel is part of the solution, we must continue to shift the dial if we are to address the growing climate emergency while continuing to guarantee food supply.”

Red diesel is fuel intended for use by vehicles and machines other than road going vehicles with a reduced (also called ‘rebated’) rate of duty. 

The standard rate of duty for fuel used by road going vehicles is 52.95 pence per litre, while the rebated rate is 10.18 pence per litre – a difference of almost 43p.

Alongside red diesel, rebated Hydrotreated Vegetable Oil (HVO), rebated bioblend, rebated kerosene and fuel substitutes will also be impacted by the changes.

The Government announced that the move was being done to help meet climate change goals and ensure that the “tax system incentivises users of polluting fuels like diesel to improve their energy efficiency”. 

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Mr Lloyd also called for greater help from the Government to help businesses adapt to the massive change.

He added: “Greater levels of support are required for farming to achieve its ambitions to become greener.

“A key element of this is incentivising renewable energy usage, particularly in the face of soaring electricity costs.

“We would like to see equivalence with red diesel through a similar tax rebate, and a commitment to long-term green pricing tariffs. 

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