Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether contractors using heavy machinery to build reservoirs on farms as part of work related to agriculture and food production can continue to use red diesel after 1 April 2022.

At Budget 2020, the Chancellor announced that the Government will remove the entitlement to use red diesel from most sectors from April 2022. This will help to ensure fairness between the different users of diesel fuels and that the tax system incentivises the development and adoption of greener alternative technologies.

The Government recognised that these tax reforms would be a significant change for some businesses and ran a consultation to gather information from affected users on the expected impact of these tax changes and make sure it had not overlooked any exceptional reasons why affected sectors should be allowed to continue to use red diesel beyond April 2022. During the consultation period, the Government engaged directly with a wide variety of organisations.

The activities accepted as falling within the definition of agriculture, horticulture and forestry are already defined in HMRC Excise Notice 75. HMRC have published interim guidance on the implementation of the changes to the tax treatment of rebated fuels, which is available at:

www.gov.uk/government/publications/changes-to-rebated-fuels-entitlement-from-1-april-2022