The government announced in its 2020 Budget that it would remove the entitlement to use red diesel and rebated biodiesel from most sectors from April 2022 to help meet its climate change and air quality targets.
The tax changes will ensure that most users of red diesel use fuel taxed at the standard rate for diesel from April 2022, like motorists.
Originally this type of fuel was introduced as a concession to industrial users (since fuel duty was intended as a tax on road users).
From 1st April 2022, many businesses will lose their entitlement to use rebated gas oil (‘red’ diesel) across different off-highway vehicles or applications, typically used in the construction industry.
BCIS Price Adjustment Formulae Indices (PAFI) for Highways and Civil Engineering will be particularly affected by this action. Gas Oil is a resource cost index included within the Highways/Civil Engineering PAFI Indices and within work categories of PAFI Building series produced by BCIS.
We were aware of the UK Government’s reform of red diesel and we are in the process of identifying all the indices that are affected.
We will consult with the industry to understand how they will respond and propose adjustments as appropriate.
We would welcome your collaboration.
To get involved in our consultation, please email email@example.com to confirm your interest and use the following subject line ‘Red Diesel Consultation’.
We will be in touch to hear your thoughts around the impact of the government’s reforms of red diesel on your business. The consultation should take no more than 5 minutes.