Red Diesel Regulations specific to UK farmers

The UK government maintains a specific policy allowing farmers to use red diesel (rebated fuel) at a lower tax rate for agricultural purposes. This policy helps support the farming sector by reducing operational costs while maintaining necessary environmental and regulatory controls.

Red Diesel Costs and Savings for Farmers

While red diesel prices fluctuate with market conditions, the key benefit for farmers is the significant tax rebate. The tax rate on red diesel is considerably lower than standard diesel, currently representing a substantial saving for agricultural businesses. However, it’s important to note that price comparisons must not be published as they change frequently and vary by region.

How Do Farmers Become Eligible for Red Diesel?

To become eligible for red diesel use, farmers must meet specific criteria:

1. The vehicles must be classified as agricultural vehicles used primarily for agriculture, horticulture, or forestry.
2. The business must be actively engaged in agricultural production.
3. The fuel must only be used for qualifying agricultural activities.

According to the UK government guidelines, no special license or permit is required, but farmers must ensure they only purchase from authorised suppliers and use the fuel exclusively for permitted agricultural purposes.

Permitted Uses Under Current Policy

The Department for Transport and HMRC guidelines specify that red diesel can be used for:

On-Farm Activities

• Cultivating land and harvesting crops
• Livestock management
• Transporting agricultural products within the farm
• Operating agricultural machinery for farming purposes

Limited Road Use

When agricultural vehicles need to travel on public roads for farming purposes, such as moving between fields or transporting harvest to farm storage, red diesel use remains permitted.

Vehicle Requirements and Restrictions

According to the government guidance documents, qualifying vehicles include:

• Agricultural tractors
• Combine harvesters
• Crop sprayers
• Agricultural material handlers
• Light agricultural vehicles (under 1,000 kg)

As stated in the Ulster Farmers’ Union guidance, these vehicles must be used primarily for agriculture, with any road use being incidental to their main agricultural purpose.

Cost Management and Compliance

Record Keeping Best Practices

While not mandatory, maintaining records of:

• Fuel purchases
• Usage logs
• Agricultural activities performed can help demonstrate compliance during HMRC inspections.

Storage Requirements

Farmers must:

• Store red diesel in clearly marked tanks.
• Keep storage facilities secure.
• Maintain separate storage from regular diesel.
• Follow environmental protection guidelines.

Farmers should also maintain spill control measures and have spill control training.

Common Questions About Red Diesel Policy

Can Contractors Use Red Diesel?

Yes, agricultural contractors can use red diesel when performing genuine agricultural work. The Ulster Farmers’ Union confirms that the test is based on the nature of the activity rather than who is performing it.

Is There a Distance Limit?

For agricultural vehicles, there’s no specific distance limit when performing genuine agricultural work. However, limited use vehicles must not exceed 1.5 km on public roads between different areas of land.

What About Building Work on Farms?

The government guidance is clear that red diesel cannot be used for construction work, even on your own farm, as this isn’t considered an agricultural activity.

Staying Compliant with Current Policy

To ensure compliance:

1. Only use red diesel for genuine agricultural purposes
2. Maintain a clear separation between agricultural and non-agricultural activities
3. Keep up to date with policy changes through official government channels
4. Consult with farming organisations like the NFU for guidance on specific cases

Remember that misuse of red diesel can result in significant penalties, including fines and vehicle seizure. When in doubt, consult with HMRC or your farming union representative for clarification on specific uses.

Future Policy Considerations

While agriculture retained its red diesel entitlement after the 2022 policy changes, farmers should stay informed about potential future changes to environmental and fuel regulations that might affect red diesel use in agriculture.