Agriculture: Red Diesel

(asked on 21st February 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether businesses that support and are associated with the agricultural industry will be permitted to use red diesel in their machinery from 1 April 2022; and whether he plans to provide financial support to businesses that fall outside the exemptions for use of that fuel in the context of increased cost associated with changing to white diesel being passed on to their customers in the agricultural sector.


Answered by
Helen Whately Portrait
Helen Whately
Minister of State (Department of Health and Social Care)
This question was answered on 1st March 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 activities accepted as falling within the definition of agriculture, horticulture and forestry (and which will continue to be eligible to use rebated fuel from April 2022) 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

To support the development of alternatives that affected businesses can switch to, the Government is at least doubling the funding provided for energy innovation through the £1 billion Net Zero Innovation Portfolio. From that portfolio, the Government announced the £40 million Red Diesel Replacement Competition, which will provide grant funding for projects that develop and demonstrate lower carbon, lower cost alternatives to red diesel for the construction, and mining and quarrying sectors.

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