Construction: Red Diesel

(asked on 14th March 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment has he made of the impact of changes to the entitlement to use red diesel from 1 April 2022 on the construction sector in the context of rising fuel prices.


Answered by
Helen Whately Portrait
Helen Whately
Minister of State (Department of Health and Social Care)
This question was answered on 17th March 2022

The Government announced at Budget 2020 that it would be removing the entitlement to use red diesel from most sectors and has legislated for this change to be implemented from April 2022. The Government has given affected businesses a year to prepare for the changes since they were confirmed at Spring Budget 2021, and many fuel suppliers and businesses will have already taken the steps needed to prepare.

These are important long-term reforms which will ensure most businesses currently using red diesel pay the same amount of tax as ordinary motorists, which more fairly reflects the harmful emissions produced. These reforms are also designed to incentivise the development and adoption of greener alternative technologies, and improvements in the energy efficiency of vehicles and machinery.

The Government recognised that this 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.

Following the consultation, the Chancellor announced at Spring Budget 2021 that the Government will grant further entitlements to use red diesel after April 2022 for a limited number of users. However, having assessed the cases made by other sectors to retain their red diesel entitlement, including the construction sector, the Government did not believe that they were compelling enough to outweigh the objectives of these reforms.

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