The main fuels
| Fuel | Used for | Key rule |
|---|---|---|
| Kerosene (heating oil) | Boilers and heating systems | Rebated kerosene can heat any premises, home or business. |
| Gas oil (red diesel) | Farm and forestry machinery, rail, boats, non-commercial heating | Only for the uses HMRC allows, listed in Excise Notice 75. |
| Road diesel (derv or white diesel) | Road vehicles, and machines not entitled to red diesel | Full duty, and always charged at the standard rate of VAT. |
| HVO | Renewable alternative to diesel; for boilers see HVO in oil boilers | Same duty rates as diesel unless it qualifies for a rebate. |
| AdBlue | Exhaust systems of many modern diesel engines | Not a fuel: it supplies the ammonia that SCR exhaust systems use to cut nitrogen oxide emissions. |
Red diesel on farms
Farming is one of the uses HMRC still allows red diesel for. Tractors and other agricultural vehicles and machinery can use it for agriculture, horticulture, aquatic farming and forestry, and machines can use it for any purpose on land kept for those uses. Vehicles built mainly to carry goods, produce or implements are classed as trucks, so they need white diesel even on farm work. Red and white diesel must not be mixed. See who can use red diesel for the full list.
VAT on business fuel
Fuel for business use is normally charged at the standard rate of VAT, but HMRC applies the reduced 5% rate to any delivery of 2,300 litres or less of kerosene, gas oil or fuel oil, whatever the use. Everything delivered to one site on one day counts as one delivery. Where farmers share a tank and each is invoiced for their own share, each share counts separately. If at least 60% of the fuel is for domestic or charity non-business use, such as a farmhouse, the whole delivery is charged at 5%, and the supplier will ask for a certificate. Road fuel is always standard-rated. There is more in how much VAT is on heating oil.
Storage, accounts and contracts
- Storage: in England and Wales, a business oil tank holding 201 litres or more must meet the oil storage rules; if you use a bund, it must hold 110% of the tank's capacity. Agricultural fuel oil on farms has its own rules, and Scotland and Northern Ireland have separate guidance from SEPA and DAERA.
- Accounts: the CMA found that some distributors give customers with an approved account more ways to pay, and some ask new customers to pay upfront.
- Contracts: read the terms on price, delivery windows, cancellations and payment dates before you sign up to a regular supply.
- Safety: for work on boilers, burners or fuel lines, call an OFTEC-registered technician.
Where Fueltool fits
Fueltool compares live heating oil prices from independent local suppliers for your postcode. Orders start at 500 litres, prices include delivery and totals are shown with 5% VAT, which is the right rate for deliveries of up to 2,300 litres. Fueltool does not sell or quote red diesel, road diesel, HVO, AdBlue or lubricants, so buy those from a fuel distributor. For kerosene, compare prices for your postcode.
Common questions
Can a business use red diesel for heating?
Only if 75% or more of the heat is for premises not used for commercial purposes. Businesses can heat any premises with rebated kerosene, though.
What VAT does a business pay on heating oil?
5% on any delivery of 2,300 litres or less. Larger deliveries for business use are charged at the standard rate, unless at least 60% is for domestic or charity non-business use.
Does Fueltool quote red diesel or AdBlue?
No. Fueltool compares heating oil (kerosene) prices by postcode, with totals shown at 5% VAT. It does not sell or quote red diesel, road diesel, HVO, AdBlue or lubricants.
Do farm pick-ups and lorries need white diesel?
Yes. HMRC classes vehicles designed mainly to carry goods, produce or implements as trucks, not agricultural vehicles, so they cannot use red diesel even for farm work.
Sources
- HMRC: Using rebated fuels in vehicles and machines (Excise Notice 75)
- HMRC: Fuel and power (VAT Notice 701/19)
- GOV.UK: Oil storage regulations for businesses (England and Wales)
- DfT: Vehicle Emissions Testing Programme (AdBlue and SCR, annex A)
- CMA: Heating oil market study, final report (15 July 2026)
Prices on this page are Fueltool's live figures for 25 October 2026: the typical (median) listing for standard heating oil, before VAT unless it says otherwise. How they are worked out.
Today's price
Typical heating oil price today: 114.1p a litre before VAT, about £1,198 for 1,000 litres with VAT.
See today's prices