Farmers and contractors who use equipment for non-agricultural work could be caught out by new red diesel rules, the National Association of Agricultural Contractors (NAAC) has warned.

Although red diesel will continue to be permitted for farm work, its use will no longer be legal on construction sites from 1 April 2022.

Recognising many farmers supplement incomes by using machinery for construction work, NAAC chief executive Jill Hewitt said farmers must ensure they do not break the law.

See also: Budget 2021: Main points for farmers include tax relief on kit

Unless machinery is being used for farm work, flood or snow clearance, gritting, or roadside hedge and verge cutting, it will no longer be allowed to run on red diesel, Ms Hewitt said. 

Any construction or amenity work such as sports field mowing or trimming hedges around car parks must only be carried out using white diesel, she explained.

Ms Hewitt voiced particular concern for contractors with large, specialist machines such as drainage equipment.

The machines could only be made profitable by carrying out a range of work that might cross from agricultural to construction, she said.

Need for clarity

“We are asking HMRC for greater clarity on whether switching from red to white diesel is acceptable,” Ms Hewitt said.

The current guidance from HMRC is to remove all traces of red diesel from the tank and filters. But this is notoriously difficult and the NAAC is seeking clarity, she added.

Ms Hewitt also stressed that HMRC had repeatedly pointed out if a vehicle is taxed as agricultural use it should only be used for farm work.

Therefore, the question over whether it is fuelled on red and white should never arise.

Agricultural contractor Bob Rutt, who runs a hedgecutting service in Northamptonshire, reckoned thousands of farmers would have to stop work vital to maintaining their incomes.

“How on earth are you going to get rid of the red stain out of a tank?” Mr Rutt asked.  

Increased costs

Even if tanks could be cleaned, those who use vehicles legitimately under the correct vehicle tax class would have to increase charges, potentially pricing themselves out of the market, he said.

“White diesel is above 140p/litre– double the price of red,” noted Mr Rutt.

At Budget 2020, the UK government announced that it would remove the entitlement to use red diesel and rebated biodiesel from most sectors from April 2022 – excluding agriculture – 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, which it says “more fairly reflects the harmful impact of the emissions they produce”.

Full details of the government’s new red diesel rules is available at Gov.UK.