Guidance: Using rebated fuels in vehicles and machines (Excise Notice 75)

1. Overview

1.1 What this notice is about

It tells you when you can use rebated diesel, biodiesel or kerosene in vehicles and other machinery.

1.2 What is rebated fuel

Diesel (also known as gas oil or DERV) is normally liable to the full rate of excise duty.

There are circumstances where a particular vehicle or machine may be able to use fuel taxed at a reduced (rebated) rate of excise duty. This is because of the type of vehicle or machine, and the purpose it’s being used for.

Where a rebate of excise duty has been allowed, fuel must be marked to show that the lower rate of duty has been charged and paid.

A mix of chemicals is used to mark the diesel, and this includes a visible red dye. For this reason, diesel taxed at the rebated rate of excise duty is sometimes known as:

• red diesel
• marked diesel
• marked gas oil

The rebated rate of excise duty is shown in the rates and allowances list as ‘Marked gas oil’.

Biodiesel and hydrotreated vegetable oil (HVO) are diesel quality fuels derived from biomass. They’re treated the same as diesel under the Hydrocarbon Oil Duties Act 1979, and are liable to the same excise duty rates.

They can also be supplied at a reduced duty rate for the same uses as diesel, if all the requirements that apply to diesel are applied. They must be marked and can only be supplied by a registered dealer in controlled oils (RDCO).

For this notice, references to using red diesel include using rebated:

• diesel
• biodiesel
• bioblend
• hydrotreated vegetable oil

Kerosene is a heavy oil that may also benefit from a fully rebated rate. Rebated kerosene must also be marked and can be used only for generating heat for use in or on premises.

1.3 Who should read this notice

Anyone who:

• uses or supplies rebated diesel, biodiesel, hydrotreated vegetable oil or kerosene
• has a vehicle or machinery that may be allowed to use rebated diesel, biodiesel, hydrotreated vegetable oil or kerosene

1.4 The law covering this notice

UK law:

• The Hydrocarbon Oil Duties Act 1979 (HODA)
• The Customs and Excise Management Act 1979
• The Hydrocarbon Oil Regulations 1973
• The Hydrocarbon Oil (Repayment of Rebates) Regulations 1996
• The Hydrocarbon Oil (Marking) Regulations 2002
• The Excepted Vehicles (Amendment of Schedule 1 to the Hydrocarbon Duties Act 1979) Order 2013
• The Hydrocarbon Oil (Marking) (Amendment) Regulations 2007
• The Hydrocarbon Oil (Marking and Designated Markers)(Amendment) Regulations 2015
• The Vehicle Excise and Registration Act 1994
• Finance Act 2021
• Finance Act 2022
• The Hydrocarbon Oil Duties (Consequential Amendments and Transitional Provisions) Regulations 2022
• The Hydrocarbon Oil Duties (Miscellaneous Amendments) Regulations 2022

Nothing in this notice modifies the law.

2. When you can use rebated fuel

2.1 Excepted machines

Certain types of vehicle and machinery, when being used for a particular purpose, can use rebated fuel. These are known as ‘excepted machines’.

Any vehicle or machine that is not an excepted machine cannot use rebated fuel.

2.2 Vehicles

The types of vehicles that can use red diesel are:

• vehicles designed to operate on a railway
• agricultural vehicles
• special vehicles
• mowing machines
• unlicensed, including SORN (Statutory Off Road Notification) vehicles

But only when they’re being used for qualifying purposes, for example:

• for agriculture, horticulture, aquatic farming or forestry
• on land maintained by a community amateur sports club (CASC)
• on a golf course or driving range
• on land occupied by a travelling fair or travelling circus

Not all the qualifying purposes apply to all the vehicle types.

You should check that your vehicle, when being used for a particular purpose, is entitled to use red diesel.

Specific details on the acceptable uses of each type of vehicle are given in section 3.

2.3 Vessels

All types of boats and marine transport, except for private pleasure craft, are expected machines and can use red diesel for any use.

Private pleasure craft are not excepted machines. They can use red diesel in Great Britain (England, Scotland and Wales), only if the user makes a declaration of how much fuel they’ll use for propulsion, and pays full excise duty on that amount.

Private pleasure craft in Northern Ireland cannot use red diesel for propulsion.

For more details read Fuel used in private pleasure craft and for private pleasure flying (Excise Notice 554).

2.4 Machines and appliances for heating and electricity

Machines and appliances being used primarily to generate heat and electricity for premises that are not used for commercial purposes can use red diesel.

A kerosene heating system is an excepted machine when it is being used to generate heat for any premises.

These uses are explained in section 7 of this guide.

2.5 Other machinery

Other machinery, engines, or appliances can use red diesel when being used:

• for purposes relating to agriculture, horticulture, aquatic farming, arboriculture, or forestry
• on a golf course (including a driving range) or land maintained by a community amateur sports club
• to operate or maintain equipment in a travelling fair or travelling circus

3. Vehicles that may use red diesel

There are 2 elements to be considered when deciding if a vehicle is an excepted machine that can use red diesel. They are:

• what type of vehicle it is
• what it’s being used for

3.1 Types of vehicle

Many of the vehicles described in these paragraphs will be classed as ‘special’ or ‘agricultural’ vehicles by the DVLA, but this does not confirm eligibility to use red diesel.

To use red diesel, a vehicle must meet the specifications in, and be used only as allowed by the excepted machine categories listed in Schedule 1A to HODA.

3.2 Agricultural vehicles

To be an ‘agricultural vehicle’ and use red diesel, the vehicle must meet one of the following 4 definitions, and be used for a purpose defined in paragraph 3.3.

It must be one of the following:

• a tractor
• a single-seat vehicle of no more than 1,000kg that is designed and constructed mainly for off-road use
• a vehicle only used for agricultural, horticultural or forestry purposes, that is licensed by the DVLA to use public roads only when passing between 2 areas of land occupied by the same person, and that distance is less than 1.5 kilometres by road
• a vehicle with permanently attached or built-in machinery used for handling or processing agricultural, horticultural, aquatic farming or forestry produce or materials — this category includes vehicles such as combine harvesters, crop sprayers, forage harvesters, pea viners, mobile seed cleaning machines and feed milling machines

Vehicles designed mainly for carrying goods, produce, and implements are trucks. They’re not agricultural vehicles even if the goods, produce, or implements being carried are for, or a result of, an agricultural activity.

In principle a Unimog would be classed by DVLA and HMRC as a truck and the previous paragraph will apply to it.

We would consider a Unimog to be a tractor for the purposes of HODA only if it:

• has only front seats, for driver and no more than 2 passengers
• has no load bay or only has an open load bay
• is licensed as an agricultural machine and used only as an agricultural tractor as described in paragraph 20B(2) of Schedule 2 to the Vehicle Excise and Registration Act 1994

A Unimog can also be an agricultural vehicle if it has permanently attached or built-in machinery used for handling or processing agricultural, horticultural, aquatic farming, or forestry produce or materials.

3.3 When an agricultural vehicle can use red diesel

An agricultural vehicle defined in paragraph 3.2, can use red diesel when being used for:

• purposes relating to agriculture (including aquatic farming), horticulture or forestry
• cutting verges, hedges or trees that border public roads
• clearing or otherwise dealing with frost, ice, snow or flooding including when the vehicle is going to or from the place where it’s used for these purposes, and for collecting and returning the necessary equipment and materials

Agricultural vehicles can also use red diesel when being used for any use on:

• private land where it’s normally kept to be used mainly for any of the purposes in the previous paragraph — for example, if a farmer or agricultural contractor keeps an agricultural vehicle on their own, or anyone else’s land mainly for agriculture use, they can use diesel in it for any other purposes on that land
• a golf course, driving range, or land maintained by a community amateur sports club, where it’s kept

Read section 12 for what we mean by activities falling within:

• agriculture
• horticulture
• aquatic farming
• forestry

3.4 Special vehicles

A special vehicle is a vehicle of any weight that is designed, constructed and used as mentioned in Schedule 1 part IV to the Vehicle Excise and Registration Act 1994, on the legislation website.

This covers such vehicles as:

• digging machines
• mobile cranes
• mobile pumping vehicles
• works trucks
• road rollers

Where a special vehicle is used for a purpose set out in paragraph 3.5, it can use red diesel for that purpose and to travel to and from the place where it’s used.

Other than weight, it must meet the specifications of, and be used in accordance with the restrictions described in the relevant part of the Vehicle Excise and Registration Act 1994.

For example, a digging machine, mobile crane or mobile pumping vehicle must not carry any load when used on public roads, except when it is necessary for its propulsion or operating the vehicle’s equipment.

3.5 When a special vehicle can use rebated diesel

A special vehicle defined in paragraph 3.4, can use red diesel only when it is used:

• for purposes relating to agriculture, horticulture, aquatic farming or forestry, including when it’s going to or from the place where it’s used for these purposes
• on a golf course (including a driving range) or on land maintained by a community amateur sports club (read paragraph 7.8), including when it’s going to and from one of these places where it is used

3.6 Unlicensed vehicles

A vehicle is ‘unlicensed’ if:

• you have submitted a SORN (Statutory Off Road Notification)
• it became untaxed before 1 February 1998
• it’s an unregistered vehicle that has never used the public road

3.7 When an unlicensed vehicle can use red diesel

An unlicensed vehicle can use red diesel if it is being used:

• for purposes relating to agriculture, horticulture, aquatic farming, or forestry as long as it is not on a public road
• on a golf course, driving range, or on land maintained by a community amateur sports club
• on land occupied by a travelling fair or travelling circus

3.8 Vehicles used between different parts of sports grounds

Where a vehicle is entitled to use red diesel because it’s being used on a golf course, driving range or community amateur sports club. It can also use rebated fuel when crossing a road that runs between 2 parts of the course or community amateur sports club land, by the shortest practicable route.

This does not apply to unlicensed or SORN vehicles if the road is a public road.

3.9 Trains

Any vehicle designed to be operated on a railway within the meaning of section 67(1) of the Transport and Works Act 1992 on the legislation website, can use red diesel.

This does not include:

• trams
• cooling or heating units or other equipment mounted in or on railway carriages or freight wagons, except where these draw their power from the same engine that propels the vehicle

4. Other machines and appliances

Any other machine or appliance (that is not a vehicle or a vessel) can use red diesel when it’s being used:

• for purposes relating to agriculture, horticulture, aquatic farming or forestry
• for purposes relating to arboriculture
• to operate or maintain equipment in a travelling fair or travelling circus
• for generating electricity or heating primarily for use in or on non-commercial premises

A machine or appliance (that is not a vehicle or a vessel) can also use red diesel when it’s being used for any purpose on:

• private land where it’s kept and used for purposes relating to agriculture, horticulture, aquatic farming or forestry — for example, a farmer who keeps a machine on their own, or anyone else’s, land that they use in agriculture, can use the machine for any other purposes on that land
• a golf course, driving range or land maintained by a community amateur sports club

A kerosene heating system can use rebated fuel for generating heat for any premises.

A machine or appliance should only contain rebated fuel if it’s being used, or was last used, for one of these purposes.

A machine or appliance is liable to seizure and financial sanction, if it is found containing rebated fuel that should not be in it.

5. Vessels and so on

All types of boats and ships can use red diesel at any time, except for private pleasure craft.

A machine or appliance that is permanently on a boat or ship can also use red diesel. This does not include any machine or appliance on a private pleasure craft that uses the same fuel supply as the engine that propels the
craft.

Private pleasure craft

The definition of a private pleasure craft is given in section 11 of Fuel used in private pleasure craft and for private pleasure flying (Excise Notice 554).

A private pleasure craft is not entitled to a rebate on fuel used for propulsion.

For this situation, users of private pleasure craft in:

• Great Britain can fill up with red diesel, but must declare the amount that will be used for propulsion, and pay full duty on that amount
• Northern Ireland that have only one fuel tank for propulsion and non-propulsion, must fill up with full duty-paid (white) diesel, but their supplier, if registered with us to do so, can allow and claim back a discount equal to the rebate, on 40% of the fuel supplied to allow for non-propulsion

For more details read Fuel used in private pleasure craft and for private pleasure flying (Excise Notice 554).

Machines used for launching lifeboats

A charity operating lifeboats can use red diesel in their tractors or gear they use to launch or haul in their boats.

6. Mowing machines

A mowing machine is a vehicle or machine designed only for mowing grass.

You can use red diesel in a mowing machine when it’s being used on:

• land maintained for purposes relating to agriculture, horticulture, aquatic farming or forestry
• a golf course or on land maintained by a community amateur sports club
• land occupied by a travelling fair or travelling circus

7. Terminology we use when describing excepted vehicles and machines, and allowed uses

This section explains what we mean by some of the terms we use to describe excepted vehicles and machines, and allowed uses in sections 3 to 6.

7.1 ‘Built in’ or permanently attached

Built in refers to equipment or features designed to be incorporated as an integral part of a vehicle, rather than being separate.

The equipment should perform the main function of the vehicle, such as:

• lifting
• pumping
• digging
• processing

We would expect these features not to be easily or quickly detachable.

Separate equipment, supporting apparatus and optional accessories are not considered built in, if they were not designed to be an integral part of the vehicle, but are simply attached to, or mounted on it for security or ease of transport.

7.2 Using fuel in a vehicle, vessel, machine or appliance

Using fuel in a vehicle, vessel, machine or appliance means using it as fuel for:

• the engine that propels a vehicle or vessel
• the engine that powers a machine or appliance
• a furnace or boiler contained in any machine or appliance

Any machine or appliance on or in a vehicle is treated as a separate machine if it is not powered by the engine that propels the vehicle.

We do not permit any ‘dual tank’ fuel system that allows a vehicle or other machine to swap between:

• rebated fuel
• unrebated fuel

7.3 ‘When being used for’

The types of vehicles and machines detailed in sections 3 to 6 can only use rebated fuel when being used for certain purposes (such as agriculture).

This includes the times when the vehicle is not actually in use, for example, a vehicle which has been used for an agricultural purpose today can have rebated fuel in its tank after use.

A vehicle or machine that is not being used should not have rebated fuel in its tank unless it:

• is only used for allowed purposes
• was last used for an allowed purpose

If you hire out vehicles, machines or appliances used for both allowed and non-allowed purposes, you will need to either:

• flush out the fuel tank to remove all traces of rebated fuel when switching uses
• make sure your machines use full duty paid fuel for all uses

You’ll need to manage how you control the type of fuel your customers use. If you allow customers to use rebated fuel for qualifying purposes in your vehicles, machines, or appliances, you must make sure it does not have rebated fuel in it, if it’s then used for a non-entitled use.

7.4 ‘Necessary for propulsion or operation of equipment’

This means goods, material, or equipment the vehicle must carry because it could not reasonably be operated without it.

This can include fuel, lubricants, and tools necessary to make adjustments, or to do any maintenance while the vehicle is being used.

It also includes any equipment required to comply with health and safety regulations, such as:

• cones to mark out a safe work zone
• operators’ personal protection equipment

Any other goods, materials or equipment not directly needed for the propulsion of the vehicle or operation of the vehicle’s equipment can not be carried.

7.5 Agriculture, horticulture, aquatic farming, or forestry

HMRC applies the following definitions of agriculture, horticulture, aquatic farming, and forestry:

• agriculture — the science and art of cultivating the soil, growing and gathering in crops, and rearing of livestock
• horticulture — the science and art of cultivating or managing gardens, including the growing of flowers, fruits and vegetables and aspects of arboriculture involving the management of trees, shrubs and woody plants in gardens
• aquatic farming — the science and art of breeding fish and other aquatic animals, or growing aquatic plants, usually for food, in fish ponds, tanks or other artificial enclosures or environments
• forestry — the science and art of forming and cultivating forests and the management of growing timber

7.6 Activities relating to agriculture (including aquatic farming), horticulture or forestry

Section 12 explains our interpretation of purposes relating to agriculture (including aquatic farming), horticulture and forestry in the ‘Memorandum of Agreement’, agreed by:

• HMRC
• Driver and Vehicle Licensing Agency (DVLA)
• National Farmers Union
• National Association of Agricultural Contractors
• Confederation of Forest Industries
• Horticultural Trades Association

7.7 Arboriculture

Arboriculture mainly focuses on the growing, care and management of trees, shrubs and woody plants. These are usually in gardens, parks or other populated settings, for the enjoyment, protection, and benefit of people.

Machines and appliances (other than vehicles) used for all forms of tree work can use red diesel. This includes, but is not limited to the use of the following by arborists and tree surgeons:

• generators
• woodchippers
• stump grinders
• mobile elevating work platforms

Qualifying vehicle types can use red diesel for arboriculture uses that are accepted as purposes relating to horticulture or forestry (read section 12). Agricultural vehicles can also use red diesel for cutting trees bordering public roads.

7.8 Public roads

The Vehicle Excise and Registration Act 1994 defines a public road as “any road that is maintained at the public expense”, for example by the Highways Agency or by a Local Authority. This includes footpaths and bridleways the public has access to that are maintained at the public expense.

7.9 Golf course

An area of land where golf is played, including the facilities used by golfers who play there, such as clubhouses and pro shops. It also includes driving ranges, whether on the site of a golf course, or not. It does not include golf courses under construction.

7.10 Community amateur sports club

The definition of a community amateur sports club is at section 658 of the Corporation Taxes Act 2010, on the legislation website.

To be a community amateur sports club it must:

• be registered with HMRC as a community amateur sports club
• be open to the whole community
• be organised on an amateur basis
• provide facilities for and promote participation in, at least one eligible sport

Read the list of community amateur sports clubs (CASC) registered with HMRC.

7.11 ‘Generating heat’ for premises

Using a system, boiler, or other appliance to:

• heat the premises
• heat water or other substances for processing, use or consumption in or on the premises

7.12 ‘Generating electricity’ for premises

Using a fixed or mobile generator to provide electricity for use in or on the premises.

7.13 Generating electricity or heat ‘primarily’ (for premises not used for commercial purposes)

Where 75% or more of the electricity or heat generated when a machine or appliance is being used is for premises, or parts of premises, not used for commercial purposes.

7.14 Premises

A house, building or other structure, together with its land and outbuildings. Premises can also include any land, means of transport or mobile premises that are being used for carrying on a business or for private use.

7.15 ‘Commercial purposes’

Commercial purposes means trading in goods or services with the intention of making a profit.

This does not include delivery of a service, where it’s intended that any profit made will only ever be used to cover the costs of delivering that service.

7.16 Premises not used for commercial purposes

Domestic premises

Premises that are mainly used as someone’s home are not used for commercial purposes. This also applies where someone’s home is also where they work.

Other examples

Other premises we consider not being used for commercial purposes include:

• premises used to deliver central and local government functions or acts of public administration, for example, NHS hospitals, state schools, town halls, public libraries
• places of worship
• premises used by registered charities for their primary purpose trading, for example, educational charity delivering education or training, museums, and independent schools
• caravans used for the accommodation of people who travel with a travelling fair or travelling circus

The type of activities done on these premises can include those that directly relate to the service you provide, and activities that indirectly relate to providing your service.

For example, a café selling food and drink in a library is not a necessary part of providing the library service. It enhances the overall experience of the facility for the public and encourages them to make use of it, and contributes to its running costs.

You can use rebated fuel to generate electricity and heat for the premises, even if commercial contractors work there, provided they contribute to the running of your service.

For example, services such as school catering and cleaning by commercial contractors do not mean that the premises are used for ‘commercial purposes’.

7.17 Kerosene heating system

A heating system that uses a furnace or boiler designed or adapted to use kerosene as fuel.

8. Use of red diesel in exceptional circumstances

There may be situations where individuals or business, whose use of vehicles or machinery is essential, cannot get or use full duty-paid (white) diesel, but can get or use red diesel.

In these circumstances, we may allow you to pay the duty on the red diesel and then use it. You will need to apply for a ‘rebated fuel licence’.

Rebated fuel licences enable the continued operation of vehicles or machines used for essential and critical purposes.

Using red diesel will be allowed only in response to exceptional circumstances, such as fuel supply issues.

This might be necessary if:

• the supply of full duty-paid diesel is interrupted
• you are an individual user like a GP or midwife, or a business such as a water supply company

8.1 When we might consider granting a licence

We will only grant a licence if we are satisfied that:

• the vehicle or machine’s use is essential and critical
• there is no viable alternative to using red diesel
• it would be unreasonable in the circumstances not to allow you to use it

It’s unlikely that we’ll approve your application if:

• there is no obvious barrier to you using duty-paid white diesel
• the circumstances interrupting the supply of white diesel, if applicable, were not unforeseen

8.2 Essential and critical use

Use of a vehicle or machine is essential and critical if, without that use, there would be a significant risk to:

• national security
• the continuity of emergency services and law enforcement
• people’s health
• the supply of essential goods and services, such as fuel, water and power
• the welfare of livestock and other animals

8.3 How to apply

You must get approval before you use red diesel in your vehicle or machine due to exceptional circumstances.

To apply for a licence you must send your request by email: LCmailbox.oilsapprovalteam@hmrc.gov.uk.

You’ll need to include details of:

• the critical and essential service that the vehicle or machine is used for
• the vehicle or machine you want to use rebated fuel in
• what the vehicle or machine is normally used for
• the circumstances in which the vehicle or machine will use red diesel
• the exceptional circumstance that prevents you using duty-paid diesel
• the consequences of not being able to use the vehicle or machine
• the journeys a vehicle is likely to make and the estimated distances
• the vehicle’s DVLA tax classification
• where you’ll store the red diesel and the type of storage
• when you plan to start using red diesel in the vehicle or machine and how much you expect to use
• how long you expect to need to use red diesel

8.4 What we’ll do with your application

We’ll check to satisfy ourselves that:

• the use of the vehicle or machine is essential and critical
• the circumstances are exceptional
• there is no alternative solution

If we decide not to issue a rebated fuel licence, we’ll advise you of our decision in writing.

8.5 If we approve your licence

If we decide you can use red diesel, we’ll send you a licence which you must present when you buy red diesel.

We recommend you carry a copy of the licence with all vehicles or machines covered by it.

The licence will also tell you:

• what your accounting period dates will be
• any terms and conditions attached to your licence
• if applicable, when we expect to withdraw it

You must use:

• form HO72 to provide an estimate of the fuel you will use during the accounting period, and pay the fuel duty due before you use any red diesel
• form HO73 if you think you will use more than the volume you have paid duty on, to provide a further estimate and pay the duty, before you use any more red diesel

8.6 Records you must keep

The law requires you to keep a daily record of all the red diesel you use in your vehicle or machine under the terms of the licence.

You must keep them at the same place as the vehicle or machine, or at any other premises agreed with our officer, for at least 12 months from the date of the last entry in them.

You must record the identifying marks of the vehicle or machine using red diesel, on the day it is used. This can be the registration number of a vehicle or serial number of a machine, showing:

• the volume and description of red diesel used in the vehicle or machine
• for vehicles, the date of, and number of miles travelled in, any journey and whether the vehicle was using rebated or duty-paid diesel
• the volume of red diesel used in a vehicle other than for propulsion, for example, to drive machinery or pumps, providing this equipment is not powered by the engine that propels the vehicle

8.7 Accounting period declaration

Your licence confirmation letter will explain how to estimate your fuel use and pay the duty due.

We will repay any duty paid for fuel that was subsequently not used.

8.8 Withdrawal

A ‘rebated fuel licence’ remains in force until we cancel it.

You must tell us of any changes to the information in your application for the licence, including when the exceptional circumstance that required the licence no longer applies.

We may periodically visit you or write to you to confirm the details on the application remain correct and the reason for needing to use red diesel still applies.

We will also cancel your licence if we are no longer satisfied that you should be approved to use red diesel, for instance, if you:

• fail to meet the obligations that arise from the licence
• use rebated fuel outside the terms allowed by the licence
• misuse red diesel, or facilitate its misuse by anyone

We will write to tell you the date your licence stops, explain why, and give you an opportunity to respond. We will also tell you how to provide a final return.

9. HMRC powers to check, sample and test fuel

The law gives HMRC officers the power to establish if the correct fuel is being used and stored by checking, sampling and testing the fuel in:

• vehicles
• machines
• vessels
• appliances
• storage tanks

For more information on what HMRC officers are allowed to do by law read paragraph 9.4.

9.1 Making fuel available for testing

As the owner or operator of a vehicle or machine, you must make your fuel available for testing if one of our officers asks you to.

If our officers are unable to take a sample, for instance, because you cannot remove an anti-theft device, or you refuse to allow it, they may seize and remove the vehicle, machine, appliance or vessel until a sample can be obtained. We may also impose a penalty for your failure to comply with this legal requirement.

We may prosecute you if you obstruct, hinder or assault one of our officers.

9.2 Fuel tested in your absence

Your fuel can be tested in your absence. You will be told about the test and the result in writing.

9.3 Testing for marked fuel

HMRC will take action against those responsible for the presence of marked oils containing any UK or EU chemical marker. These include:

• Accutrace S10 — a marker used in the UK and Republic of Ireland
• Coumarin — a UK marker
• Quinizarin — a UK marker
• the ‘Euromarker’ — Solvent Yellow 124, a marker used in the UK and the EU

9.4 Powers of HMRC officers

Our officers are allowed by law to:

• examine any vehicle or machine, and any oil in or on it and to inspect, test or sample any oil in the fuel supply
• require vehicle or machine owners, or anyone in charge of a vehicle or machine, to open or cause to be opened the fuel tank or other source of the fuel supply so that the fuel can be located and inspected, tested or sampled — if there is anything in the supply which might hinder this, it must be removed
• require anyone in charge of a vehicle or machine, to produce any books or documents relating to the vehicle or to oil carried on it and which are carried by that person or on the vehicle or machine
• enter any premises (except private dwelling houses) and inspect, test and sample any oil on the premises, whether in a vehicle, machine or elsewhere — in entering the premises, an officer may bring with them any vehicle used for carrying out official duties
• require the occupier of the premises or the person in charge of them to facilitate the inspection, testing or sampling of oil on their premises or oil in the fuel supply of vehicles or machines on the premises, irrespective of whether the oil or the vehicle or machine belongs to that person or someone else — this includes attending normally unmanned premises when our officers require access to fuel
• require anyone concerned with the sale, purchase or disposal of any oil to produce on demand any relevant books or documents
• require you to provide satisfactory evidence that any fuel in your possession (including in your running tank) is fully UK duty paid

10. Other rebated fuel matters

10.1 Mixing rebated fuels with fully duty-paid fuel

You must not mix these fuels in any tank, or in the fuel system of any vessel or machine not allowed to use rebated fuel. We may seize the fuel and vehicle or machine if you do.

10.2 Vintage vehicles

Some vintage tractors (in production before 1960) and cars (in production before 1956) need to run on a mixture of kerosene and petrol.

Kerosene is a heating fuel and the excise duty on it is fully rebated (reducing the excise duty to nil). For this reason, it is illegal to use kerosene in any vehicle or to mix it with road fuels unless you have a permit from us allowing you to do so.

To apply for a permit email: oils.policymail@hmrc.gov.uk with details of:

• the vehicle you want to use kerosene in, including year of production
• what the vehicle is normally used for, the frequency of use, and the anticipated annual mileage
• why kerosene needs to be used
• how much kerosene you expect to use

If we decide to allow you to add kerosene to your vehicle’s fuel, we’ll send you a permit stating the circumstances in which you can use kerosene.

11. HMRC response to illegal fuel use

11.1 What will happen if you misuse rebated fuel

We will seize any vehicle, vessel, machine, or appliance that is using rebated fuel when it is not allowed to.

We may offer to restore your vehicle, vessel or machine to you for a fee and subject to any conditions we consider appropriate.

11.2 Offences and penalties

We will take action against you if you commit offences involving rebated fuel.

You will be liable to a penalty under Section 9(2)(a) of the Finance Act 1994 if you:

• take in or use rebated fuel as fuel for a vehicle, machine, vessel or appliance that is not an excepted machine
• mix rebated or duty-free fuel with fully taxed fuel
• do not provide records when asked to do so
• do not allow our officers to take a sample of fuel
• remove any designated chemical marker or dye from any fuel
• add any substance to fuel to prevent the chemical marker from being identified

We will seize the oil and any containers and equipment used to commit any of these offences.

You may also have to pay:

• the fuel duty evaded, going back up to 4 years
• a wrongdoing penalty based on the extent of your illegal fuel use

In more serious cases involving assault, repeated offending or dishonesty, criminal action may be taken. The offender can be fined an unlimited amount or imprisoned for up to 7 years, or both.

11.3 If you disagree with HMRC’s decision

The Finance Act 1994 contains the appeal and review procedures for challenging the following excise decisions:

• the terms offered for restoration of a vehicle, vessel or machine we have seized
• our decision not to restore any vehicle, vessel or machine we have seized
• a civil penalty or civil evasion penalty
• tax assessment of excise duty

The procedures are different depending on what decision or decisions you’re challenging. We’ll give you a decision letter, and tell you what your rights are, if you want to challenge our decision.

Information about challenging HMRC restoration decisions and linked decisions can be found in what you can do if things are seized by HMRC or Border Force.

More information is available on HMRC’s review and appeal procedures.

11.4 Appeals against the seizure of your machine

The arrangements for challenging the seizure of things liable for forfeiture (rather than HMRC’s decision about whether to return them to you) are different from the arrangements on HMRC’s review and appeal procedures.

If you disagree with our decision to seize your vehicle, machine, vessel or appliance, you can appeal in writing to the seizing officer within one month of the seizure date. We must receive your appeal by this deadline.

We must then bring civil (‘condemnation’) proceedings in the courts to determine the matter, and you can challenge the seizure and forfeiture there.

More information on how to challenge the seizure of goods by HMRC can be found in what you can do if things are seized by HMRC or Border Force.

11.5 How to report misuse of rebated fuel

Find out how to report the misuse of rebated fuel.

12. Memorandum of Agreement

Memorandum of Agreement in respect of purposes relating to agriculture (including aquatic farming), horticulture and forestry.

Parties to the agreement

Clear guidelines have been written for the use of machines and vehicles in agriculture (including aquatic farming), horticulture or forestry. The following government departments and agencies, and industry associations, have agreed how legislation shall be interpreted and applied:

• HMRC
• DVLA
• National Farmers Union
• National Association of Agricultural Contractors
• Confederation of Forest Industries
• the Horticultural Trades Association

The purpose of this Memorandum of Agreement is to provide guidance to those engaged in agriculture, horticulture or forestry, and to agencies enforcing compliance with the legislation.

Any disputes will be considered on an individual basis, with regard to relevant legislation, and any definitive interpretation of the law will be given by the courts.

Scope of agreement

This Memorandum of Agreement is restricted to the use of agricultural and special vehicles and machines by:

• the occupier of the land or the owner of the crop
• a contractor or other person engaged to perform an agricultural, horticultural or forestry operation

The definitions of vehicles and machines covered by this agreement for hydrocarbon oils duty purposes can be found in Schedule 1A to the Hydrocarbon Oil Duties Act 1979 (HODA), as amended.

Definitions of agricultural vehicles covered by this agreement for vehicle excise duty purposes can be found in Schedule 2 to the Vehicle Excise Registration Act 1994 (VERA), as amended, on the legislation website.

When vehicles covered by this agreement are not used on public roads other than for purposes relating to agriculture, horticulture or forestry they are exempt from Vehicle Excise Duty. Other classes of vehicles that are exempt from Vehicle Excise Duty are not covered by this agreement.

Vehicles, machines and appliances covered by this agreement that are being used for purposes relating to agriculture, horticulture or forestry can use red diesel.

Meaning of ‘purposes relating to agriculture’

In our view, agriculture is the growing and harvesting of crops, for food, beverages, fodder, fuel, or industrial purposes, or the rearing of animals of any kind for producing food, wool, leather or other substances. Using a vehicle for ‘purposes relating to agriculture’ includes using it to:

• transport agricultural ‘inputs; such as feed, fertilizer, fence posts, and so on for use on your farm (by ‘your farm’, we mean the farm that you own or manage, but also the farm where you work)
• take your produce and livestock to market or for processing (including slaughter)
• move produce and livestock between your farm and an associated storage facility
• transport material to be used for maintaining or improving your farmland (including drainage pipes)
• transport materials to repair and maintain your farm buildings (other than the farmhouse itself)
• deliver agricultural waste from your farm to a waste tip
• transport vehicles and equipment for use on your farm

Meaning of ‘purposes relating to horticulture’

In our view, horticulture is the cultivation and management of gardens (including vegetable plots, allotments and market gardens, but also flowerbeds, trees, shrubberies and ornamental lawns in public parks).

By cultivation and management, we mean growing and tending flowers, lawns, shrubs and trees, and harvesting flowers, fruits and vegetables for food (or animal fodder) and for ornament, as well as treating and enriching the soil and controlling weeds and pests.

We do not regard as horticulture the landscaping and maintenance of grassy recreational areas, such as playing fields and golf courses, or the grassed areas of parks that are made available for walks, picnics and general recreation. Using a vehicle for purposes relating to horticulture includes using it to:

• travel to and from a place where it will be used for horticulture
• transport trailed or mounted implements to be used for horticulture
• take your horticultural produce to a market or to a place where it is to be sold or processed
• move your horticultural produce between the place where it is grown and an associated storage facility
• deliver horticultural waste from the place of production to a waste tip
• transport horticultural inputs such as seed, fertiliser, pesticides and so on for use in your own garden or in land set aside for horticulture

Meaning of ‘purposes relating to forestry’

In our view, forestry is the upkeep and management of forests including the growing and harvesting of timber and other forestry products.

By ‘forest’ we mean:

• an area of land where trees have been planted (often in rows and columns) with the intention that they will be grown and harvested for timber, or other forestry products
• a pre-existing natural forest which is being maintained and managed so that it can be harvested for timber, or other forestry products

Using a vehicle for purposes relating to forestry includes using it to:

• travel to and from a place where it will be used for forestry
• transport trailed or mounted forestry implements and machinery to and from the place they will be used for forestry
• move timber that you (or your co-worker) have harvested from where it was harvested to the place where it is to be stored, sold or processed

‘Aquatic farming’

The breeding or rearing of creatures and the growing and harvesting of crops or plants are accepted activities whether they take place on land or in water. Therefore, activities accepted as being purposes relating to agriculture and horticulture include equivalent water-based activities involved in pisciculture and aquaculture. This includes the breeding and rearing of fish and other aquatic creatures and the growing of aquatic plants in artificial conditions such as in tanks, ponds, or reservoirs, for food.

Activities accepted as ‘purposes relating to agriculture, horticulture and forestry’

Activities we accept as falling within the definition of agriculture, horticulture or forestry include:

• breeding or rearing of any creature kept for the production of food, wool, skin or for the purpose of its use in the farming of land
• slaughtering any creature reared for the production of food, leather or other substances
• disposal of fallen stock and rendering of animal by-products at premises approved by the Animal and Plant Health Agency (APHA), where these activities are a necessary part of the agricultural or aquatic farming process
• growing or harvesting of crops including cereals, combinable crops, roots, tubers, vegetables, pulses, fruit, nuts, grasses, oilseeds and fungi for food, beverages, fodder, fuel or industrial purposes
• growing or harvesting of flowering or ornamental plants
• growing or harvesting of timber or other forestry products
• cultivating and managing trees, shrubs and woody plants in gardens
• installing and maintaining fences and gates used to contain livestock or protect growing crops
• upkeep of land used for agriculture, horticulture or forestry, such as using agricultural science, practices and technologies to ensure soil is prepared and conserved for sustainable food production
• renewal, restoration and maintenance of ecosystems and habitats impacted by agriculture, horticulture and forestry, and areas of agricultural land under environmental management schemes
• running or participating in events which provide information and education that benefit agriculture, horticulture or forestry, including taking part in charitable activities that promote these industries

Activities not accepted as falling within the definition of agriculture, horticulture or forestry include:

• the breeding, rearing or keeping of any creature solely for purposes relating to sport or recreation.
• dealing in agricultural, horticultural or forestry products
• the further processing and preparation of agricultural, horticultural or forestry produce, or slaughtered animals, except where this is a necessary extension of the agricultural, horticultural or forestry operation to facilitate the handling, storage and transport of them, for example hay baling
• landscaping
• cultivating and managing trees, shrubs and woody plants outside of gardens (such as in recreational areas, and so on) except where these activities are purposes relating to forestry — as defined in this section
• the maintenance of recreational facilities, such as tennis courts, parks, or beaches (read section 3 of this notice for the rules regarding the use of rebated fuel on golf courses, driving ranges, and on land used by community amateur sports clubs)
• flood protection
• peat or loam extraction
• exploitation of wild animal or plant stocks
• construction of buildings or other structures used for purposes relating to agriculture, horticulture or forestry
• transportation of agricultural, horticultural, or forestry produce, livestock, implements, inputs or waste, other than where this is incidental to an agricultural, horticultural or forestry operation — accepted transportation uses are as set out in the following section of this agreement

Accepted transport uses

Subject to restrictions in the definition of the particular type of vehicle in HODA and Vehicle Excise Registration Act 1994 (VERA), vehicles exempt from vehicle excise duty or entitled to use red diesel when used for purposes relating to agriculture, horticulture or forestry are accepted as being used for those purposes when they’re being used in the following circumstances:

Moving vehicles and other machinery

This includes:

• driving an agricultural vehicle to and from a place where it is to be used or has been used for agricultural, horticultural, or forestry purposes
• transporting trailed or mounted agricultural, horticultural or forestry vehicles, implements, machines or appliances and of equipment or inputs required for their use as part of an agricultural, horticultural, or forestry activity — this does not include transportation or towing of personal accommodation
• taking agricultural vehicles and trailed or mounted implements, machines or appliances to and from where they are serviced, repaired, inspected or tested, including collection, servicing and return of vehicles and machines by garage operators
• delivering or collecting an agricultural vehicle or machine that has been bought, sold, loaned or hired and is or will be used for agricultural, horticultural or forestry purposes

The moving of vehicles and machines by dealers, garage operators and others not engaged in agricultural, horticultural or forestry operations in circumstances other than those listed in the previous 2 paragraphs, is not covered by this agreement.

Moving produce and livestock

This includes:

• transporting agricultural, horticultural or forestry produce within or between different areas of land occupied by the same person
• transporting livestock within or between different areas of land occupied by the same person
• transporting agricultural, horticultural or forestry produce from the place of production to temporary storage
• transporting livestock from the place it is reared to a place of temporary storage
• transporting produce from where it’s harvested, or from temporary storage, to where it’s to be sold, processed or otherwise disposed of
• transporting of livestock from where it’s reared, or from temporary storage, to where it is to be sold or slaughtered

The transportation of produce or livestock must be incidental to an agricultural, horticultural or forestry operation. The responsibility is on the person transporting the load to demonstrate that this is the case.

Transportation of produce or livestock which needs a goods vehicle operator’s licence may not be accepted as being incidental.

Transportation of produce or livestock by anyone not involved in the agricultural, horticultural or forestry operation, including by a contractor employed solely for that purpose by a buyer or any other person, haulage an is not included within this agreement.

Moving agricultural, horticultural or forestry inputs

Collecting inputs and equipment used as part of an agricultural, horticultural or forestry operation, and transported within or between different areas of land. The land must be occupied by the same person as the inputs and equipment used.

This includes:

• hand tools
• fertilisers (including farm produced manures and slurries)
• pesticides
• seed
• animal bedding, feed and water
• fencing materials
• road plans for the repair of unsealed tracks

This does not include:

• household furniture or fittings
• supplies required for domestic use
• organic or inorganic waste that is not to be used for the benefit of agricultural land or in an agricultural operation

Moving waste

This includes:

• moving agricultural, horticultural or forestry waste, within and between different parts of land occupied by the same person — the waste should have been produced by the occupier of the land — this includes movement of farm slurry by an agricultural contractor using specialist equipment on behalf of the occupier of the land
• transporting agricultural, horticultural or forestry waste by the producer from where the waste was produced to a licensed waste disposal site or to a place where it is to be collected by a licensed waste carrier — this includes inorganic waste such as plastic packaging and replaced agricultural fencing materials, but does not include dismantled or demolished buildings
• clearing the road after agricultural, horticultural or forestry operations, or cutting hedges and verges

13. Examples of purposes relating to agriculture, horticulture and forestry

Working on someone else’s farm

If you are contracted or engaged to carry out agricultural work at a farm or other land used for agriculture, horticulture or forestry, you are using your tractor for purposes relating to agriculture, horticulture and forestry when:

• driving it to and from the farm (or where you are going to use it for the contracted work)
• carrying the materials or equipment that you need to do the work
• removing any produce or waste resulting from the contracted work

Using your tractor to transport agricultural produce

You can transport produce to where it will be sold or put to its intended use if you’ve been involved in the growing or harvesting of the crops.

But, if your involvement is limited only to transporting the crops, we consider the use of the vehicle to be for haulage, not for purposes relating to agriculture.

This would apply to someone contracted, for example, solely to transport crops from an agricultural producer to an anaerobic digestion plant. Such journeys are not considered a purpose relating to agriculture.

Using your tractor to transport livestock

You can transport livestock to where it will be sold or slaughtered if you’ve been involved in rearing the livestock.

But, if your involvement is limited only to transporting the livestock, we consider the use of the vehicle to be for haulage, not for purposes relating to agriculture.

Transporting waste material

You can deliver waste material resulting from an agricultural activity on your farm to where it will be disposed of, sold or otherwise processed.

You can also move waste material within and between different parts of land you occupy.

If you are moving farm slurry you can employ an agricultural contractor using specialist equipment designed for the purpose to move it for you.

You can also collect waste material for agricultural use on your own farm, or the farm on which you work, or are contracted to carry out agricultural work, for example, spreading fertiliser on fields.

Except in the example of farm slurry being moved by a contractor using specialist equipment, you are not engaged in purposes relating to agriculture if you are only transporting the waste material and you are not engaged in an agricultural activity that produced it or in which it will be used.

Forestry work

Clearing felled timber is part of forestry harvesting. This must be in a forest, or a commercial forestry enterprise. Cutting down trees anywhere else is not forestry work, even if you sell the timber.

Chipping, shredding or fine cutting of woody material such as logs and branches you’ve harvested, is accepted as being part of your forestry operation.

Further processing of harvested timber by anyone not involved in the forestry operation is not a purpose relating to forestry.

Biodiversity conservation, environmental management, and ecological restoration

Land restoration, and ecological and conservation projects are accepted as agricultural, horticultural and forestry purposes. This is providing the work is intended to help reduce the impacts of agricultural land use, such as overgrazing, horticulture and forestry on ecosystems and habitats. This includes maintenance of areas of agricultural land under environmental management schemes.

Ditch clearing and drainage

Ditch clearing and drainage, including work carried out by, or on behalf of a risk management authority (given in section 6 of the Flood and Water Management Act 2010), is accepted as a purpose relating to agriculture, horticulture or forestry. This is only if the work you do is intended to benefit land used for agricultural purposes (including horticulture and forestry). This means the purpose of the work must, at least in part, be to avoid agricultural land becoming unfit to grow crops or rear livestock on.

Any drainage work or flood and coastal erosion management activities with no agricultural benefit to the land, are not agricultural purposes, even if the work takes place on agricultural land.

Working on utilities and infrastructure on or crossing agricultural land

Laying and maintaining utilities, such as telephone or electricity cables across agricultural land, is an agricultural purpose if the utilities are installed specifically for the agricultural benefit of that land. If it’s not, the work and the filling of holes or trenches to repair the land afterwards is not an allowed activity. However, where it is necessary to bring in a specialist contractor to apply agricultural practices and technologies to make sure the land is properly restored for growing crops or rearing livestock, the contractor’s work is a purpose relating to agriculture.

Gardening businesses

If your business involves the cultivation and maintenance of a garden or gardens, this within the definition of horticulture.

If you work somewhere that is not a garden, such as playing fields, a livery yard, stables, at the side of the road, on someone’s private land, then this is not horticulture and, the vehicle or machine you use is not an ‘excepted’ machine’.

(Read the ‘meaning of horticulture’ in the ‘Memorandum of Agreement’.)

Running and participating in agricultural shows, and so on

An agricultural show is an outdoor public event. It demonstrates the skills and exhibits the equipment, and animals associated with agriculture and animal husbandry.

They are usually held on dedicated showgrounds and hosted in collaboration with several partners to:

• disseminate information on best practice and farming techniques, and the latest farming technology to farmers
• provide a source of information and education about the industry to members of the public
• raise charitable funds, which are used to further these educational aims and support local communities
• sell and showcase produce created from locally farm-grown ingredients

By attending agricultural shows, farmers are likely to receive beneficial farming advice from exchanging ideas.

They give farmers the opportunity to:

• learn about new innovations
• meet and ask researchers how different farming technologies can be used to improve productivity
• learn how a particular innovation can be applied on their farm

The shows benefit agricultural purposes by providing information and education. The running or participating in agricultural shows, or taking part in charitable activities, such as tractor runs and ploughing matches, promote the farming industry. These are purposes relating to agriculture.

Similarly, running and participating in events which provide information and education that benefits horticulture or forestry are considered as purposes relating to horticulture or forestry.

Events hosted by a single company to convince farmers that its specific products are the best, or events aimed only at selling agricultural machinery, materials, livestock or produce, such as ‘farmers’ markets’, are not agricultural shows.

However, farmers can use rebated fuel in a qualifying vehicle to transport their produce or livestock to where it will be sold.

Training and tuition

Providing training or tuition in the safe and competent operation of a vehicle or machine that you use for agricultural, horticultural or forestry work is accepted as a purpose relating to agriculture, horticulture or forestry. This does not include where vehicles or machines are used only for training purposes, such as at tractor training centres or driving experience days.

14. Examples of activities that are not purposes relating to agriculture, horticulture or forestry

Sports fields and recreational areas

Maintenance of grassed areas such as sports fields and recreational areas, is not regarded as horticulture.

Wasteland

Cutting down trees or vegetation on wasteland is not agriculture, horticulture, or forestry work.

Stables, livery yards and so on

Keeping animals for sport or recreation is not agriculture. This includes fish farmed or kept only for recreational purposes.

Flood defences

Building or maintaining flood defences is not agriculture.

Service providers — hire companies, dealers, servicing and repair garages, and hauliers

If you’re not directly involved in as agricultural activity, you’re not regarded as using vehicles or machinery for agriculture, horticulture and forestry purposes. This includes if you’re:

• a dealer in farm equipment or materials, delivering materials or equipment that a farmer has leased or purchased from you
• lending equipment to a farmer
• a haulier employed to transport animals, produce, goods or equipment to or from a farm

Read the section about moving vehicles and other machinery.

In all other circumstances, dealers and garage operators are not entitled users and must use white diesel for their own uses.

If you’re dealing in second-hand vehicles and machines previously used for accepted activities, we will allow the machines to contain marked diesel provided you can evidence that this is only for allowed use by the previous owner or user.

Red diesel can be used if you’re a dealer and you loan a vehicle or machine for the purposes of a demonstration or trial that includes using the machine for accepted purposes, for example to a farmer for agricultural use. In those circumstances, the vehicle or machine will be treated as used and the previous paragraph will apply to it.

If you’re a garage operator, you can service, maintain, repair, or inspect vehicles and machines that are fuelled with red diesel if the vehicle or machine is otherwise used for accepted purposes. You can also collect and return a vehicle that you work on.

Your rights and obligations

Read the HMRC Charter to find out what you can expect from us and what we expect from you.

Help us improve this notice

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This address is not for general enquiries.

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If you need general help with this notice or have another question contact the HMRC excise enquiries helpline.

Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

How HMRC uses your information

Find out how HMRC uses the information we hold about you.