Red Diesel

(asked on 28th March 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the impact of the Government's proposed reforms to the tax treatment of red diesel on (a) business costs, (b) business closures and (c) jobs.


Answered by
Helen Whately Portrait
Helen Whately
Shadow Secretary of State for Work and Pensions
This question was answered on 31st March 2022

At Budget 2020, the Chancellor announced that the Government would remove the entitlement to use red diesel from most sectors from April 2022. This more fairly reflects the negative environmental impact of the emissions produced and helps to ensure that the tax system incentivises the development and adoption of greener alternative technologies.

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. During the consultation period, the Government engaged directly with a wide variety of organisations from all parts of the UK.

Following the consultation, the Chancellor announced at Spring Budget 2021 that the Government would grant further entitlements to use red diesel after April 2022 for a limited number of users. However, the Government did not believe that the case made by sectors that will not retain their red diesel entitlement outweighed the need to ensure fairness between the different users of diesel fuels and the Government’s environmental objectives.

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