Fears in farming circles that the chancellor is planning to remove the lower rate of fuel duty for red diesel in next week’s Budget have been downplayed by Scotland’s farmers’ union.
Rumours are circulating that Chancellor Rishi Sunak is planning to scrap the fuel tax break for farming and construction vehicles, and raise the current duty on red diesel from 11.1p, to the standard diesel fuel rate of 57.7p.
However, in a statement NFU Scotland (NFUS) assured the industry: “Our understanding is that there is no suggestion currently that any changes to red diesel duty will affect genuine agricultural use.”
The UK Government consulted on red diesel in both 2018 and 2019 to obtain an up-to-date picture of its use by various industries, and it is understood another consultation is expected to be unveiled this week – but it is likely to relate only to haulage and construction vehicles.
NFUS head of policy team Gemma Cooper said: “The ability to use red diesel represents a significant cost saving for the agricultural industry and this must be retained.
“With some exceptions, it is important to remember that red diesel is for off-road use and is already subject to low duty (not no duty) as well as VAT.
“Low-duty red diesel available to the agricultural industry is commonplace throughout Europe and the rest of the world.”
Many farming organisations, including the NFU in England and Wales and the Royal Association of British Dairy Farmers (RABDF) have urged the government to keep the lower rate of tax to allow farm businesses to remain competitive.
NFU president Minette Batters said: “Removing this from farmers would leave them at an immediate competitive disadvantage, coming at a time when farmers are dealing with ongoing uncertainty over our future trading relationship with the EU and rest of the world.”
RABDF chairman Peter Alvis said: “The government must understand that farmers and contractors have no alternative to red diesel.”
nnicolson@thecourier.co.uk
