According to the Financial Times, Chancellor Rishi Sunak intends to use the Budget to “signal the end of a decade of freezes on fuel duty”. Civils contractors have warned that cutting the rebate on red diesel will cost construction up to £490m a year. Gas oil intended for use in diesel engine road vehicles (DERV) currently has a duty rate of 57.95 pence per litre (ppl).

End of the road for red diesel? As a taste of things to come, government is increase fuel tax on diesel for parts of the construction industry, amongst others, by 400%, from the currently discounted level of 11.14 pence per litre to the standard 57.95 pence per litre, resulting in an increase in annual fuel costs to the UK of … Red diesel is used by contractors for off-road plant including excavators and generators. Plans to ditch the red diesel rebate expected to appear in the Chancellor’s next Budget could cost working farmers as much as 50p/L. The government is set to consult with red diesel users to determine whether continued access to the fuel is justifiable. Civils contractors have warned that cutting the rebate on red diesel in this week's budget will cost the UK’s construction industry between £280m to £490m a year. However, it has been frozen for the 11th year running, meaning that the duty - applied on top of VAT - will remain at 57.95p per litre for petrol and diesel. In a The red-diesel tax rebate is due to be abolished for the construction industry in the 2022/23 fiscal year, the chancellor confirmed in his Budget. Red diesel is 47p cheaper per litre than regular diesel Red diesel is typically used in agriculture and is taxed at 11.14p a litre compared to 57.95p a litre for standard diesel. A Budget decision to close a red diesel tax loophole will add up to £5,000 to the cost of building every new home, one of the UK's leading suppliers is warning. Red diesel accounts for 15 per cent of sales of the fuel and is used in tractors, bulldozers, forklifts, cranes, combine harvesters and generators.
From April 2022, red diesel will be available only to agriculture and the rail sector.

As part of today's Budget, the Chancellor has also re-iterated his pledge to double spending on flood defences, committing a further £5.2bn … ... Sunak will scrap the red diesel rebate in his budget statement next week. Red diesel is typically used in agriculture and is taxed at just 11.14 pence per litre compared to 57.95 pence per litre for standard diesel, but it is also used to power 90% of all rail freight as well as secondary engines for refrigeration lorries, off-grid heating and construction equipment, meaning private companies such as Sainsbury’s, Veolia and JCB have benefitted from cheaper fuel. Red diesel is licensed for use in vehicles that do not use roads and has a fuel duty of 11p per litre compared with 58p for regular diesel. Tax exempt red diesel, which is used by contractors for off-road plant, is presently 47p cheaper than regular diesel per litre.