Red Diesel and Rebated Fuel UK 2026/27 — Vehicles, Machines and Rules

Red diesel is the common name for marked gas oil and other fuel supplied at a rebated rate of excise duty. The lower rate is not a general discount for any diesel vehicle. HMRC's current Excise Notice 75 says that entitlement depends on both the type of vehicle or machine and the purpose for which it is being used.

Farmers, forestry operators, contractors, golf-course operators, boat owners and businesses using machinery should check the exact use before putting rebated diesel, biodiesel, hydrotreated vegetable oil or kerosene into a tank. HMRC updated Notice 75 on 18 September 2026, so older red-diesel summaries may not contain the latest contact details or operational wording.

What counts as rebated fuel?

HMRC uses “rebated fuel” for fuel taxed at a reduced rate of excise duty. The guidance covers, among other fuels:

• rebated diesel, also called red diesel, marked diesel or marked gas oil;
• rebated biodiesel and hydrotreated vegetable oil;
• kerosene used for qualifying heating purposes; and
• certain fuel oils and bioblends under the relevant conditions.

The colour or marker is not the legal test. The key question is whether the vehicle, vessel, machine or appliance is entitled to use the fuel for the actual purpose. Fuel that is lawful in a tractor or fixed machine can be unlawful in a road vehicle used for an unrelated journey.

The two-part eligibility test

Before using red diesel, answer both questions:

If either part fails, do not assume the rebate applies. Some categories have additional restrictions, and the same physical vehicle can have a different result when its use changes.

Common permitted use cases

HMRC's guidance describes permitted categories that can include:

• agricultural, horticultural, aquatic-farming, arboricultural and forestry work;
• certain vehicles and machines used on a golf course or driving range;
• land maintained by a community amateur sports club;
• equipment used by a travelling fair or travelling circus;
• vehicles designed to operate on a railway;
• qualifying mowing machines; and
• machinery or appliances primarily generating heat or electricity for non-commercial premises.

The permitted purpose does not automatically apply to every journey connected with the business. Read the detailed section for the particular vehicle type. For example, transporting people, tools or goods on a public road may not be the same activity as carrying out the qualifying agricultural or forestry operation.

Contractors and mixed-use equipment

Contractors can fall within the rules when they perform qualifying agricultural, horticultural or forestry operations. The business should document the work being performed, the equipment used, where it operates and whether the fuel remains in the tank between qualifying and non-qualifying uses.

If a vehicle or machine is used for both allowed and non-allowed purposes, HMRC says the operator may need to flush the tank when switching use or use fully duty-paid fuel for all uses. A dual-tank system that allows the operator to switch between rebated and unrebated fuel is not a safe workaround under the notice.

When equipment is hired out, the owner or hirer must control the fuel position. Allowing a customer to use rebated fuel for a qualifying job does not make it lawful for the customer to use that fuel for a later non-qualifying job.

Boats and private pleasure craft

Most commercial boats and marine transport are treated differently from private pleasure craft. HMRC says vessels other than private pleasure craft can generally use red diesel for any use, subject to the detailed rules.

For private pleasure craft:

• in Great Britain, a user can take red diesel but must declare the proportion used for propulsion and pay full duty on that amount;
• in Northern Ireland, private pleasure craft cannot use red diesel for propulsion; and
• fuel used for non-propulsion purposes has its own treatment and supplier requirements.

Do not apply the Great Britain rule to a Northern Ireland journey or assume a single-tank arrangement resolves the propulsion declaration. Use the current Excise Notice 554 guidance for the vessel, location and fuel use.

Exceptional circumstances and approval

HMRC may consider a licence where a vehicle or machine that is not otherwise an excepted machine must use rebated fuel because of an essential and critical service and exceptional circumstances. This is an approval route, not an emergency assumption that can be used before permission.

The application needs details such as the service, vehicle or machine, normal use, exceptional circumstance, likely journeys, storage, expected volume and duration. If approved, the licence sets the conditions. Operators must record identifying details and fuel use, and the notice describes an accounting-period declaration using form HO75 in the relevant licence situation.

Obtain approval before using the fuel under the exceptional route. Keep the licence with the vehicle or equipment records and stop using rebated fuel when the approved circumstances end.

Records and HMRC checks

Maintain a simple fuel-control file containing:

• the vehicle or machine identification and its technical description;
• the qualifying activity and location;
• dates, journeys, mileage or machine hours where relevant;
• fuel receipts, volumes and storage details;
• records of tank cleaning or fuel changes for mixed use;
• customer or hire documentation; and
• any licence, declaration, duty payment or repayment evidence.

HMRC can inspect premises, test and sample oil, request books and records, and require evidence that fuel is fully duty-paid. A vehicle, machine, vessel or appliance using rebated fuel outside the rules may be seized, and penalties can apply to unauthorised use, mixing fuel, marker removal or failure to provide records.

Test the machine and the actual activity together

Begin with the equipment, not the fuel supplier’s label. Record whether the asset is a tractor, agricultural machine, construction machine, road vehicle, vessel, heating appliance or another type of equipment. Then describe the actual work: cultivation, forestry, horticulture, construction, quarrying, transport, private pleasure, heating or another activity. The same machine may qualify for one job and require full-duty fuel for another. A fleet policy should therefore identify permitted activities rather than marking an entire vehicle as “red diesel allowed”.

Road journeys need particular care. Moving equipment between sites, carrying materials, travelling to a customer or returning empty can be different from operating the machine for the qualifying activity. Keep a journey log that records the purpose, route, vehicle, date and fuel used. If a vehicle is hired out, retain the hire contract and tell the customer which uses are permitted. Do not assume that an agricultural, plant or special-vehicle registration removes the need to test the actual use under HMRC’s notice.

Control storage and fuel changes

Where a business has separate tanks, label them clearly and restrict access to trained users. Reconcile deliveries, opening stock, closing stock and recorded usage. If the same tank supplies more than one vehicle or activity, document how the business identifies full-duty and rebated use and how any required duty adjustment is calculated. A colour, pump label or accounting code is not a substitute for evidence of entitlement.

If an asset changes from a qualifying to a non-qualifying use, record the change date, fuel remaining, tank-cleaning steps and the replacement fuel. Keep the supplier invoice and any duty payment or declaration. The same control applies when a machine is sold, hired, moved across the UK, converted or assigned to a new project. Ask HMRC or a qualified adviser before making a change where the notice does not clearly cover the facts.

Keep Northern Ireland and Great Britain rules separate

A cross-border operation should maintain a route and location schedule. Note where the fuel is loaded, where the vehicle or vessel is used, whether the journey is in Great Britain or Northern Ireland and whether the use is propulsion or non-propulsion. Private pleasure craft rules are especially location-sensitive, and the Great Britain declaration-and-full-duty approach should not be copied into a Northern Ireland file. A single company-wide fuel policy can be supplemented with territory-specific instructions, but it should not collapse the two regimes into one rule.

Evidence for rebated-fuel use

Record the product, vehicle or machine, journey or activity, date, quantity, supplier, duty treatment and user. Keep invoices, delivery notes, fleet records and any declaration or authorisation. A fuel's colour or a supplier description is not enough to prove that the use is permitted. Check the approved use and the current duty rules before filling a tank.

Separate road vehicles, agricultural or construction machinery, heating, vessels and private use. If a vehicle changes use, record the date and fuel remaining and follow the current adjustment process. Do not mix rebated and full-duty fuel records or treat a business purpose as a blanket exemption.

Review the position after a fleet change, new supplier, cross-border movement or duty reform. Keep the official rate and effective date used for each transaction and reconcile stock to purchase and usage records. Date each review and identify the person who approved the fuel classification.

Frequently Asked Questions

For broader UK fuel-tax changes, read the UK fuel duty changes guide. Rebated-fuel entitlement is a use-and-equipment test, not simply a lower fuel price, so confirm the current HMRC notice before refuelling or changing a business process.

Official sources

• HMRC: Using rebated fuels in vehicles and machines — Excise Notice 75
• HMRC: Motor and heating fuels — Excise Notice 179
• GOV.UK: Agricultural vehicle licences, tax information and fuel
• HMRC: Fuel used in private pleasure craft and private pleasure flying — Excise Notice 554