Who can use red diesel?

What red diesel is

Red diesel is gas oil charged at a rebated (reduced) rate of fuel duty. HMRC also calls it marked diesel or marked gas oil: it carries chemical markers and a red dye so misuse can be detected. The same rules cover rebated biodiesel and rebated HVO.

It is not the same as most household heating oil. That is usually kerosene, which has a fully rebated (nil) duty rate and its own marker, and may only be used for heating.

Who can still use it

From 1 April 2022 the government removed most entitlements to red diesel. HMRC's Excise Notice 75 sets out the uses that remain:

• agriculture, horticulture, aquatic (fish) farming and forestry, including tractors and machinery used on that land, and machines used for arboriculture
• agricultural vehicles cutting verges, hedges or trees that border public roads, or clearing frost, ice, snow or flooding
• vehicles designed to run on a railway
• all boats except private pleasure craft, and the tractors or gear a lifeboat charity uses to launch and recover its boats
• golf courses, driving ranges and land kept by community amateur sports clubs
• operating or maintaining travelling fair and circus equipment
• heating and generating electricity primarily for premises not used for commercial purposes

Goods vehicles are trucks, not agricultural vehicles, so a lorry or pick-up carrying farm produce on public roads still needs white diesel.

Heating with red diesel

Apart from the uses above (heating a golf clubhouse counts, for example), red diesel can only fuel a boiler or generator if at least 75% of the heat or electricity is for premises not used for commercial purposes. Homes count, even if you work from home, as do NHS hospitals, state schools, town halls, public libraries, places of worship and charities using premises for their main purpose.

Otherwise, a business heating commercial premises with gas oil has to use full-duty fuel. Kerosene is treated differently: HMRC counts a kerosene heating system as an excepted machine for any premises, so shops, offices and farms can still heat with rebated kerosene.

Northern Ireland

The 2022 changes cover the whole UK, and the rules on marking rebated fuel are the same in every nation. The main difference is boats. In Great Britain a private pleasure craft can still fill with red diesel if the owner declares how much will be used for propulsion and pays full duty on that share. In Northern Ireland private pleasure craft cannot use red diesel for propulsion and must fill up with fully duty-paid diesel, though a craft with a separate tank for heating and other non-propulsion uses can still use red diesel in that tank.

Getting it wrong

Using red diesel in a vehicle or machine that is not entitled to it, mixing it with white diesel or removing the markers can lead HMRC to recover the duty evaded for up to 4 years, add a penalty and seize the vehicle or machine. Serious cases can bring an unlimited fine, up to 7 years in prison, or both.

In exceptional circumstances, essential users who cannot get white diesel can apply to HMRC for a rebated fuel licence, which lets them use red diesel after paying the difference in duty. The licence must be in place before any red diesel is used. Fueltool does not sell or quote red diesel, road diesel or HVO. For kerosene to heat a home or business, compare heating oil prices for your postcode.