In the red

Understanding the changes to rules relating to the use of red diesel

The rules relating to the use of red diesel will change on 1 April. Broadly, this means that many non-agricultural businesses that currently make use of red diesel will have to switch to using white diesel from this date. However, this seemingly simple change has thrown up many grey areas for rural businesses who often undertake a range of different operations with their vehicles. In this blog, Rural Surveyor Claire Wright explores what the changes mean.

What do the changes mean?

Undertaking work in agriculture, horticulture, forestry or fish farming will still qualify you to use red diesel but care has to be taken to ensure that the planned work does not fall outside of the HMRC’s definition of agriculture:

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

There is also a further exemption for the use of red diesel in exceptional circumstances which allows farmers to cut hedges and verges, clear snow, assist with gritting and help in clearing up after a flood without needing to swap to white diesel.

It is also worth noting that contracting work may still use red diesel provided the contractor is using an allowed machine for an allowed purpose. Baling hay or haylage for equestrian use is also allowed as the farmer doesn’t control the end use of the product. However equestrian facilities themselves aren’t agricultural so work carried out to maintain the yard and stables such as raking the arenas would require white diesel.

However, members may no longer use red diesel including where they are constructing agricultural buildings or other work related to agriculture such as laying concrete for a silage clamp as this would be defined as construction work.

Other areas are even murkier as you can use red diesel to drill and maintain strips of bird cover where this only linked to environmental stewardship however if the drilling was for a game cover in connection with a shoot it would require the use of white diesel as its primary purpose is for keeping a creature solely relating to sport or recreation. In a similar fashion, you can use red diesel to harvest crops intended for an anaerobic digester but haulage of the crops to the AD plant will require white diesel.

Keeping up to date to the changes relating to red diesel

The changes are incredibly complex and made more so by government U-turns.

For example, HMRC was holding firm that the use of red diesel for ploughing matches and set up at agricultural shows would not be a qualifying activity.

However, industry lobbying has seen this made into exempt activity. If members need further guidance on this topic they should consult Excise Notice 75 or contact the Regional office for more tailored assistance.