Farmers and the Old Red Diesel. I wouldn't know about that, sir.

 

The November 2024 Inheritance Tax protests by farmers generated some unwanted flack about "rich farmers driving around on duty free red diesel."

In among the concerns about townies not understanding the problems of country folk, the whole issue is like a red oily rag to a bull. 

As HMRC Notice 75 will tell you, rebated marked gasoil (or red diesel) is not intended for use as a road fuel. 

The law behind this is the Hydrocarbon Oils Duty Act 1979, which says that marked gasoil, ( or chemically marked and dyed gasoil) can only be used in ‘excepted machines’.  The definition of an excepted machine depends on the type of vehicle (for instance, an agricultural vehicle) and the use (for instance, agriculture).  It must be classed as an agricultural tractor by the DVLA and be unlicensed under the Vehicle Excise Registration Act. If a tractor has a general vehicle excise license as a haulage vehicle, it cannot use red diesel because it is not solely intended for agricultural work.

Having said that, you will see agricultural tractors legally driving on the King’s Highway (ie roads maintained at public expense). This is when they are making an incidental use of the public road. Some people have queried the definition of ‘incidental’ (how ‘incidental’ is a piece of string?) but it is generally meant to be journeys that are infrequent and of short duration. When taking produce to market or to the slaughterhouse, for instance. I believe the thinking behind this is that it would be unrealistic to expect farmers to keep a 2nd tractor on white for those 'incidental' trips (how “incidental” is a piece of string). 

One point the weather quickly reinforced was that farmers can use red diesel in their tractors when they’re working to clear frost, snow or flooding from the public road (“I bet you were all glad to see us out then” one farmer shot back). 

A lot of folk were hoping the farmers would get their tanks sampled on the way to the protest. As IHT rallies are not an agricultural activity, the tractor tanks should have been drained of red diesel, flushed and refilled with white diesel before they drove to Westminster. A road block, pulling the tractors to one side while their tanks were sampled would have delayed the protest and maybe even taken a few out if they were be found to be running on red. But I reckon the farmers on the protest would have thought ahead and not wanted to gamble making an own-goal by driving on red diesel.  I’m also not so sure it would have looked good for a number of HMRC Road Fuel Testing Unit to be dragged into anything that looked political ( or would have been made to look political by the press). And it wouldn’t have done their stats much good if every sample came up clean. 

Some thought the whole exemption should be done away with – in an echo of the argument over Inheritance Tax, “farmers are small to medium enterprises and no other rural SME gets that exemption.”  

Of course, the Government attempts to address the problem for rural road users with the Rural Fuel Duty Relief Scheme, which allows retailers in certain areas to sell road fuel at a 5% discount on the duty. Whether it works or not is a different question, although I notice that the Liberal Democrats have been lobbying the extend the scheme.

One lady Boater also suggested that farmers should be made to repay the duty on road use of red diesel. She pointed out that, as a boater she can buy “red diesel that is sold on both a taxable and non-taxable basis at the same time”. She’s right that Private Pleasure Craft can declare the proportion of red diesel to be used for propulsion and pay the duty on it, while the heating proportion is kept at a reduced rate  (in Northern Ireland boaters must fill up with white diesel with a proportion supplied at a reduced rate for non-propulsion). But this was a concession that was brought in when duty was first charged on pleasure craft. It was an attempt to make life easy for boaters and their suppliers. It doesn’t apply to tractors travelling on the public highway. At the most basic level, all boats are equal on water. And can you imagine the nightmare for farmers and their suppliers if they had to start quantifying the duty on every potential tankload of fuel?

As far as Red Diesel and Tractors goes, what I’ve said is a broad simplification. There are lots of different circumstances that have to be taken into account. It’s the same story for any tax – it’s simple to start with, and then life gets in the way.

One last thought as far as the whole “Farming For Food” issue goes. The most recent DEFRA stats* say that 2.2% of UK arable land (133, thousand hectares) is used to grow crops for bioenergy (both road fuel and heat and power). So in a small way they’re actually Farming For Fuel. 

(*Gov.uk June 2024)


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