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<p>At Budget 2020, the Chancellor announced that he would remove the entitlement to
use red diesel from most sectors from April 2022. These tax changes mean that most
businesses in the UK which used red diesel prior to April 2022 no longer get a significant
tax break compared with ordinary motorists; they instead now need to use diesel fuel
taxed at the standard rate for diesel, which more fairly reflects the harmful impact
of the emissions produced. These reforms are also designed to ensure that the tax
system incentivises users of polluting fuels like diesel to improve the energy efficiency
of their vehicles and machinery, invest in cleaner alternatives or use less fuel.</p><p>
</p><p>The Government recognised that this would be a significant change for some
businesses and ran a consultation to gather information from affected users on the
expected impact of these tax changes and make sure it had not overlooked any exceptional
reasons why affected sectors should be allowed to continue to use red diesel beyond
April 2022. During the consultation period, the Government engaged directly with a
wide variety of organisations from all parts of the UK.</p><p> </p><p>Following the
consultation, the Chancellor announced at Spring Budget 2021 that the Government will
grant further entitlements to use red diesel after April 2022 for a limited number
of users. However, the Government did not believe that the case made by sectors that
have not retained their red diesel entitlement outweighed the need to ensure fairness
between the different users of diesel fuels and the Government’s environmental objectives.</p><p>
</p><p>Further details on the impact of the reforms has been published as part of
the Tax Impact and Information Note: <a href="http://www.gov.uk/government/publications/changes-to-rebated-diesel-and-biofuels-from-1-april-2022"
target="_blank">www.gov.uk/government/publications/changes-to-rebated-diesel-and-biofuels-from-1-april-2022</a></p>
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