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How will the changes on diesel tax affect my business?

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In March 2021 the government announced several changes to the ability to use red diesel for industrial purposes. This means that many industries will no longer be allowed to use this rebated fuel after 1st April 2022.

What are the changes to tax on fuel for industrial use?

Red and white diesel work in the same way. The only difference is the addition of a red dye that makes it easier for authorities to know if you are using red diesel illegally as it also colours all components it comes into contact with.

After the deadline, companies will need to move over to white diesel which will be taxed at full rate. The government have brought in these changes to encourage companies to move to greener solutions to generate their power.

What businesses will be affected?

The effects of this change will be felt across many industries. Most importantly, all industries that currently use red diesel for power generation. Although the law has already been written, it is likely to undergo revisions over the next few years as the climate change targets get tougher.

The construction industry will be one of the toughest hit. The government have released a list of all current affected industries here.

What do I need to do to prepare?

To prepare your business for the upcoming change it is important to start running your red diesel stocks down before this date. Make sure that you keep all invoices and purchase orders whilst also keeping good records of current usage. There will be some leniency and you won’t need to get your generators flushed through.

Despite there being some leeway while running your stocks down after 1st April 2022, it is important that you do not stock pile red diesel before this date.

Will the changes affect affect HVO fuel?

The tax changes will be implemented across the board. This means that HVO fuel, (Hydrotreated Vegetable Oil fuel) will also not be able to be used as a rebated fuel. Despite this being the case at the moment. There is increasing pressure for this to change as we continue to drive towards greener solutions for power generation.

Even though changing to more renewable fuel sources won’t give you benefits on fuel tax, there are several other benefits that making the change now can provide.

What are the benefits of using HVO over diesel?

Using HVO as your main fuel source rather diesel has numerous benefits. Both for your business and for the planet.

It can reduce greenhouse gas emissions by as much as 90%. It is also 100% renewable, biodegradable and non-toxic. Due to it’s make up it meets the ever increasing legislative requirements for bio fuel.

It is more stable increasing it’s storage life to up to 10 years.  This is much longer than the storage life of diesel which is 1 year, meaning it needs much less testing.

It burns far more efficiently. This means that you get year-round performance. Especially when trying to use your generator in the winter. It’s cleaner burn also reduces particulate production during combustion. This keeps your engine oil cleaner for longer.

Better than all the other benefits though. It can directly replace diesel as your fuel source with little to no alterations to your current generator.

Before you make any changes, make sure you get your generator checked by us at Solent Power. We are happy to provide advice and help with your transition from red diesel fuel.

Your power is Our Priority.

Contact us today for advice and help with fuel transitions.

Paul Phelps Solar Power Owner
Paul Phelps
Paul is the MD of Solent Power and specialises in emergency power solutions, helping to protect your facilities from power loss. Get in touch with us today to discuss the different power brands that we can offer and how they can suit your needs.
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