How the red diesel rebate reduction affects builders

Construction and manufacturing companies received a tax rebate for using red diesel fuel in their off-road vehicles and industrial machinery. However, starting on April 1st, 2022, the red diesel rebate was taken away from companies in several sectors and industries. The Civil Engineering Contractors Association estimates the rebate loss could cost construction companies anywhere from £280 million to £490 million annually.

This red diesel rebate reduction was announced way back in 2020, so companies have had time to prepare for it. The government wants construction companies to use greener alternatives to red diesel, so they are removing the rebate to encourage companies to look for alternative fuels.

Unfortunately, there are not too many greener fuel alternatives available to small builders and firms. In fact, this new government measure will increase fuel costs for small builders, which means their service costs will increase for their clients. That will have significant ramifications for both small builders and the number of people who want to build.

As a result, the government needs to step in and support the construction industry, particularly small builders. It makes no sense that farmers in the agriculture industry are exempt from the red diesel rebate reduction, but not builders. Smaller builders need more affordable access to greener alternatives if they are going to survive. Biodiesel costs up to 15% more than regular diesel, which is already too much for most small builders to afford.

Do you have questions about the red diesel rebate reduction laws? Collyer Construction Limited can answer your questions and help you find the most affordable options for your building project. Contact us at 01252 624041 or email us at