When you go from red to white you’ll need an accountant who is fully fuelled

Blog image

As a business the cost of your fuel is enough to cause you to run dry and now, as of April 1, a further cost might add to your woes.

As part of the government's efforts to meet carbon reduction and air quality targets, current users of red diesel will lose their eligibility to use 'red' or rebated fuel and so is prompting a move to white 'road' diesel.

Red diesel is used mainly for off-road purposes, yet it accounts for around 15% of all the diesel used in the UK and is responsible for the production of nearly 14 million tonnes of carbon dioxide each year. Previously, red diesel could be used in any machine which is not a road vehicle. Now you will now only be able to use rebated fuel for specific purposes and when using certain allowed machines, vehicles, vessels and appliances.

From an accounting perspective, adding to these limitations, there are financial implications too.

Users of red diesel will now be taxed at the standard rate for diesel, like motorists, which more fairly reflects the impact of the emissions they produce. Removing most red diesel entitlements will also help to ensure that the tax system encourages users of more polluting fuels, like diesel, to improve the energy efficiency of their vehicles and machinery, invest in cleaner, greener alternatives, or just use less fuel.

So, while these businesses will need to pay the full duty rate for using white diesel, the environmental benefits are heightened as a result.

At GSM we are familiarising our clients of their fuel entitlement for their sectors and the path to follow to mitigate the costs in running-down or removing red diesel and rebated biofuels from vehicles, machinery and storage tanks and from selling back any excess red diesel stock to fuel suppliers. There are also likely to be costs associated with sourcing other alternative fuels for those sectors no longer allowed to use rebated fuels and these need to be accounted for as well.

Where you will no longer be able to use rebated fuel and you cannot change to a cleaner alternative, you'll need to use diesel or biofuel on which the full rate of fuel duty has been paid.

As this measure will be monitored through information collected from fuel duty receipts of red diesel and white diesel, we will guide clients through the necessary routes to communicating the steps they have taken.

So, if your business could benefit from greater clarity on the measures introduced and a route that will ensure you will stay out of the red, be it for fuel or incurring unnecessary costs, contact GSM today on 020 7935 3793