On 3rd March 2021, Chancellor Rishi Sunak announced the UK Budget, including the end of the red diesel duty rebate from April 2022. Nearly one month later and there is still uncertainty around how existing stocks of red diesel are to be managed, what level of record keeping is required, how equipment used in both construction and agriculture will be treated and if there will be a package of incentives and allowances available to hire businesses and suppliers.
Despite HAE EHA being directed to government support measures by officials, it is clear that several of the UK Budget announcements, most notably the super-deduction and enhanced capital allowances, are not for use by those purchasing for the purpose of hire or 'leasing' (see below).
While HM Treasury has the lead on taxation matters (and this is about removing the red diesel duty rebate); the Department for Business, Energy and Industrial Strategy (BEIS), Her Majesty’s Revenue and Customs (HMRC) and the Department for Environment, Food and Rural Affairs (DEFRA) all have parts to play. HAE EHA has been encouraging the Treasury and BEIS to work together in shaping a comprehensive package of support for our sector. HMRC is responsible for duty enforcement and guidance to distributors of oils and DEFRA for emissions policy.
HAE EHA has also been involved in early stage scoping of a new funding programme specifically for businesses making the transition from red diesel, however construction is overlooked by existing schemes. A programme of any kind has not yet been announced by BEIS.
With the duty rebate being scrapped for construction from April 2022 this is urgent. HAE EHA is working with the Construction Plant-hire Association (CPA) and other federations and manufacturers to make the case for clarification and a package of support to encourage transition from older diesel equipment and, where alternatives are available, from diesel altogether.
In the meantime, an email from Treasury officials makes clear (particularly if you are a tax expert) that the hire sector cannot benefit (with some exceptions) from several of the UK Budget measures which were specifically announced as backing the green economy. Here’s a summary of those key points:
Professional advice should be taken with regard to the tax implications of business transactions and investments.
HAE EHA will continue lobbying and intends to share further guidance or advice as soon as it is received. Mark Bradshaw is leading HAE EHA on this topic and welcomes contact from members who are able to support the campaign.