Consultation deadline looming for red diesel

The consultation period on reforms to the tax treatment of red diesel and other rebated fuels, announced in the March 2020 budget, closes on 1st October. So if you haven’t yet told Rishi Sunak what you think of the plans to end this tax rebate for red diesel on construction sites, now would be a good time to do so.

Users of off-highway construction machinery currently pay tax of just 11.14 pence per litre on diesel instead of the standard tax rate of 57.95 pence per litre. The subsidised diesel is dyed red purely to distinguish it from the standard rate fuel.

Chancellor of the exchequer Rishi Sunak described the rebate in March as a “£2.4bn tax break for pollution that’s also hindered the development of cleaner alternative”.

It might be a stretch to hope that the chancellor will change his mind completely, but construction trade bodies are hoping they may be able to persuade him to delay the axe from April 2022 to April 2023, given the difficult economic climate.

Other concessions could be worth pushing for, believes Karl Sullivan, managing director of generator supplier Optimum Power Services (OPS).

“The proposal is that ineligible companies will be prohibited from using red diesel as well as purchasing it after 1st April 2022”, he says. “This will be a logistical nightmare. Companies will not want to switch to white diesel early because of the cost implications. But if they still have stocks of red diesel after 1st April 2022, they’re liable to prosecution. There are some circumstances in which red diesel stocks are considered ‘legitimate’, but these are open to interpretation”.

He suggests that those yet to respond to the consultation do so by highlighting the difficulties of its implementation. “If (the Treasury) wants to limit the availability of red diesel, restricting its sale after 1st April 2022 is more practical than prohibiting its use”, Karl Sullivan says.

For details of the Treasury’s proposals, and how to submit responses, see