Red diesel is nothing more or less than ordinary diesel fuel of the kind that you might put into a car, van or minibus at your local service station. Where it differs from that fuel, however, is that it is taxed at a lower rate for certain allowed industrial uses.
So why the name? Because the taxman (Her Majesty’s Revenue and Customs, or HMRC) likes to know who is using it and whether they are legally entitled to the tax-reduced arrangement. They arrange to have it dyed red so that if they investigate illegal uses, they can recognise the low-tax fuel.
You may now be wondering why this low-tax fuel exists and who is allowed to have it. There are three main groups who are allowed to use this diesel. First, farmers, who can use it in farm machinery and tractors but only if the tractors are actually working on the farm, and not if they’re being used for (somewhat slow!) leisure or business travel on a road.
Next, construction users. Diggers, cranes and other machinery can use red diesel. Again, the same restriction applies as for farmers: you can’t use this diesel in a vehicle that will be travelling on the roads – only in one that will be used on site. In the construction industry, you may hear the fuel referred to as “cherry diesel”, “medium diesel” or “gas oil”.
Council gritters are allowed to use the diesel, and so are the ride-on lawnmowers used in horticulture. So are data centres, who need it to fuel the back-up generators that kick in if there is a power cut and they need to keep everyone’s internet access going.
You may have heard someone say they use it for heating. This had better be for heating a boat – that’s allowed, but the owner has to label the fuel clearly as tax-reduced diesel. Using red diesel when you are not entitled to could land you in court, facing not only the repayment of all the tax you should have paid but also substantial fines.
However, if you think you might be entitled to use red diesel, why not ask an expert like ValueOils.com? They’ll be able to tell you whether you are likely to be able to take advantage of the tax reductions and will offer unbeatable prices.
