UK farmers retain red diesel relief following budget announcement

The UK’s agricultural tax rebate on red diesel is set to stay, much to the relief of British farmers, following the announcement by UK Chancellor of the Exchequer Rishi Sunak of his new budget plans earlier this week.

Also known as marked mineral oil – fuel with a colour dye added to differentiate from regular diesel – the UK’s red agricultural diesel is the equivalent to Irish “green diesel”.

The National Farmers’ Union (NFU) warned scrapping the relief would cost farmers as much as 50p/L. Tax on red diesel amounts to 11.1p/L compared with 57.7p/L on white diesel.

The chancellor announced that the tax relief will end in two years’ time for construction.

However, businesses working in agriculture, fishing, rail and heating industries will continue to be exempt.

NFU president Minette Batters said the relief was “absolutely crucial” to farmers.

“We are pleased to see the chancellor has acknowledged our concerns,” she said.

“Red diesel is the primary fuel to run the majority of agricultural machinery and it is incredibly important for the farm businesses that produce the nation’s high-quality and affordable food.

Changes to this duty could have virtually doubled fuel costs for farmers and with no current alternative fuel for agricultural vehicles, this would have left farms immediately uncompetitive with many other countries who continue to provide lower fuel duty for their agricultural industries.

“This lower fuel duty on red diesel recognises its importance to farm businesses, their ability to produce food for the nation and the fact this machinery is mainly used off-road on farms,” Batters said.