The UK has successfully been weathering the post-pandemic storm and a solid recovery is forecasted to continue. But in an effort to meet clean air targets, from 1 April 2022, the rebated entitlement for most sectors using red diesel, also known as gas oil, will be removed for most sectors except for agriculture, horticulture, fish farming, forestry, rail and non-commercial heating systems.
What sectors are affected, and how?
Any business operating in any sectors not included above will now have to ditch red diesel, and use fuel taxed at the standard white diesel rate. The current rate has been running since 2010 and has been frozen for 10 years, and it will of course impact businesses costs. However, the measures were taken after public consultations, which also included ways to help businesses choose greener elements in their operations that would help meet air quality targets.
Businesses who rely on red diesel to heat their premises should be aware of possible increased costs but should look into switching to more efficient heating systems or a less polluting fuel type. It is also recommended to replace or flush out tanks before the diesel tax changes to avoid red diesel traces after switching to white diesel. If you are driving a low emissions car there are government schemes that you may benefit from.
To discuss how the changes can affect your business and other tax questions, get in touch with your local AIMS Accountant as we are able to guide you further.