BUSINESS SUPPORT
Seeing red? The end of red diesel use by the industry is in sight
A
ssociation Technical Officer, Owen Baker takes a closer look at the issue that’s on everyone’s mind – the proposed changes to rebated fuel in the landscaping industry and what this means.
During the 2020 Budget the Government announced it was considering removing the entitlement to use rebated fuel from most sectors - including landscape maintenance and mowing machines, from April 2022 onwards. The proposed removal was put in place to incentivise the development and adoption of greener alternatives, and a consultation was accordingly put in place from July 2020 to October 2020. Under the proposed reforms to rebated fuel use, agriculture, horticulture, fish farming and forestry sectors would retain the entitlement to use red diesel postApril 2022. However, construction, landscape construction, and most maintenance activities associated with commercial landscaping were explicitly excluded from using rebated fuel under the proposal.
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LANDSCAPE NEWS SPRING 2022
Informal discussions with stakeholders confirmed the proposal was universally unpopular; Association members were concerned by the lack of alternative ‘green’ equipment available on market, the cost of transitioning to white diesel, the increased risk of theft and, most importantly, the potential for a detrimental impact on the environment as contractors and/or clients sought to reduce fuel use to meet budgets. The Association urged the government to reconsider their proposal and highlighted the potential financial impact this decision would have on the industry, whilst offering little benefit to the environment. Solutions suggested to HMRC included allowing a temporary stay of execution of five years, as well as including landscaping activities within the horticulture sector.
What do the changes mean for the industry?
HM Revenue and Customs chose to proceed with their initial proposal and, in March 2021, confirmed the entitlement to use red diesel will be removed from most landscaping activities and construction from 1 April 2022. The greatest loss is likely to be
felt by industry members who currently use red diesel in mowing machines for commercial grounds maintenance, although contractors reliant on construction equipment will also suffer. Internal calculations by the Association suggest, collectively, members will spend an additional £6 million on fuel because of the rule changes.
There are limited scenarios when rebated fuel may be used by Association members as part of their work beyond April 2022. One of these is when activities are performed within the HMRC definition of ‘horticulture’. HMRC regard horticulture as the cultivation and management of gardens, including flowerbeds, trees, shrubberies [sic] and ornamental lawns in public parks. HMRC have confirmed this definition of garden extends to communal gardens in areas of social housing but is distinct from the maintenance of grassy recreational areas such as playing fields or grassed areas used for walking, picnics, and general recreation. HMRC also allow rebated fuel to be used by agricultural vehicles for
