The Chancellor’s budget includes a range of indirect tax measures, such as changes to the Carbon Border Adjustment Mechanism (CBAM), fuel and alcohol duties, plastic packaging tax, landfill tax and gaming duties.

See our separate article on budget changes to VAT.

CBAM changes and potential expansion

The government has announced several changes to the UK’s CBAM, which takes effect from 1 January 2027.

From 2029, country-specific default values will replace the global default values used during 2027 and 2028. The government says this will allow default values to reflect the emissions associated with imports from different countries more accurately.

The government is also consulting on expanding CBAM to include refinery products. Any expansion will be subject to the outcome of the consultation on its feasibility and impacts, which closes on 20 January 2027. Legislation will be brought forward if the government decides to proceed.

The Finance Act 2026 will also be amended, with commodity code 7202 29 (other ferro-silicon) added to the existing ferro-silicon exclusions from CBAM from 1 January 2027, to correct an error in the legislation.

Read the consultation on expanding CBAM to refinery products

Fuel duty cut extended

The temporary 5p per litre cut in the main rates of fuel duty will be extended for a further six months, from 1 January to 30 June 2027. The additional 3.7p per litre reduction in the rebated rates for red diesel and certain other fuels will also be extended to that date.

On 1 July 2027, the temporary 5p cut will end and fuel duty rates will also be uprated in line with the Retail Price Index (RPI). Annual RPI uprating will resume from 1 April 2028.

Alcohol duty and small producer relief

From 1 February 2027, alcohol duty rates will increase in line with RPI. The government will also make small producer relief more generous, with a more favourable discount taper for products below 3.5% alcohol by volume and increased marginal discounts for products at or above 3.5%.

The simplified duty rates applying to travellers’ allowances will also increase in line with the alcohol duty rates.

Plastic packaging tax certification

From 1 April 2030, businesses claiming an exemption from plastic packaging tax (PPT) on the basis that packaging contains at least 30% recycled plastic will need certification for the mechanically recycled plastic used. The government confirmed the change in its response to a May 2026 consultation on certification. The detailed requirements will be developed ahead of implementation.

Read the consultation and government response

Landfill tax changes

From 1 April 2027, the standard rate of landfill tax will increase in line with RPI, while the lower rate will increase by the same cash amount, preventing the gap between the two rates from widening.

From the same date, the exemption for stabilising materials added to dredged material before disposal will be removed, so that only the dredged material itself will qualify for the exemption.

Machine games duty liability to change

From 1 April 2027, the rate of machine games duty (MGD) will increase from 20% to 25% for machines where the maximum charge to play is more than £1 or the maximum cash prize is more than £100.

From 1 April 2028, liability for MGD will move to the machine supplier where supplier-owned machines are operated under profit-sharing arrangements. The operators of premises will remain liable where they own the machine or use it under a fixed rental or lease arrangement and control the takings.

The government is consulting on the detailed implementation of the changes, with responses due by 20 January 2027.

Soft drinks industry levy registration requirement

From 1 April 2027, soft drinks producers that produce more than 1 million litres of liable drinks will no longer need to register for the soft drinks industry levy where they do not package or import the drinks themselves and therefore have no liability to pay the levy.

New penalty for excise wrongdoing

The government will introduce a new civil penalty for deliberate conduct intended to evade UK excise duty before an excise duty point arises. The penalty will take effect from Royal Assent to Finance Bill 2026-27.