Back in 2020, the government announced it would be banning the use of red diesel and rebated biodiesel in most sectors from next April.
The tax changes are being introduced to help meet climate change and air quality targets.
It means that, from April 2022, most users of red diesel will have to make the switch to fuel taxed at the standard rate for diesel, like motorists, reflecting the harmful impact of emissions produced.
As set out through the Finance Bill 2021 and subsequent secondary legislation, the entitlement to use red diesel and rebated biofuels will be restricted to qualifying purposes.
They include for vehicles and machinery used in agriculture, horticulture, fish farming and forestry.
This includes allowing vehicles used for agriculture to be used for cutting verges and hedges, snow clearance and gritting roads.
Sectors losing their entitlement to use red diesel, however, include construction, mining and quarrying, ports, manufacturing (e.g. ceramics, steel, timber), haulage (for transport refrigeration units on lorries), road maintenance, airport operations, oil and gas extraction, plant hire, logistics and waste management.
The government held a consultation last summer to ensure that it had not overlooked any exceptional reasons why other sectors should be allowed to continue to use red diesel beyond April 2022.
Whilst these businesses will now have to pay the full duty rate for using white diesel, the government hopes this will encourage the use of greener alternatives.
White diesel has a fuel duty rate of 57.95 pence per litre (ppl), while red diesel is entitled to a rebate of 46.81ppl, giving it an effective duty rate of 11.14ppl.
Registered fuel suppliers that switch a fuel tank from red to white diesel will need to flush out the tank and supply lines to ensure there is no trace of marked rebated fuel remaining.
This will help to ensure compliance and minimise the risk of white diesel, that has had the full duty rate paid on it, being contaminated with the red diesel marker.
Red diesel accounts for around 15 per cent of all the diesel used in the UK and is responsible for the production of nearly 14 million tonnes of carbon dioxide a year.
In 2019, the UK became the first major economy in the world to pass laws guaranteeing an end to its contribution to global warming by 2050.
This target means the UK needs to reduce greenhouse gas emissions to net zero by 2050.