ICAEW's Tax Faculty's provides a summary of the announcements on environmental taxes in the Autumn Budget 2021.
From 1 April 2023 a new domestic band for air passenger duty (APD) will be introduced to cover flights within the UK, to support UK connectivity. In addition, a new ultra-long-haul band will be introduced to cover destinations with capitals located more than 5,500 miles from London to align APD more closely with the government’s environmental objectives.
For the tax year 2023 to 2024, the rates for domestic flights will be £6.50 for those travelling in economy class, £13 for those travelling in all other classes, and £78 for those travelling on aircraft with an authorised take-off weight of 20 tonnes or more with fewer than 19 seats.
The rates for the short and long-haul bands will increase in line with RPI, meaning a real-terms freeze. The economy rate for the ultra-long-haul band will be set at £91, £4 greater than the long-haul band, £200 for those travelling in all other classes and £601 for those travelling on aircraft with an authorised take-off weight of 20 tonnes or more with fewer than 19 seats.
Fuel duty rates will remain frozen for 2022/23, for the 12th year in succession. No reference was made to the possibility of replacing fuel duty with road pricing.
The standard and lower rates of landfill tax will increase in line with the RPI with effect from 1 April 2022, rounded to the nearest 5 pence.
|Material sent to landfill
|Rate from 1 April 2021
|Rate from 1 April 2022
|Lower rated (per tonne)
The value of the Landfill Communities Fund for 2022 to 2023 will be set at £30.8m, with the cap on contributions by landfill operators remaining at 5.3% of their landfill tax liability.
The plastic packaging tax legislation contained within Part 2, Schedule 9 and Schedule 13, of FA 2021 will be amended to ensure that the tax operates as intended, that the UK complies with international agreements, and that HMRC has the appropriate framework to administer the tax.
The amendments will:
- Allow HMRC to make provision to modify the timing of an import, and the meaning of import and customs formalities, using secondary legislation. This change ensures that the timing of imports can be amended to conform with changes to other policies, such as customs and Freeports (s 50).
- Ensure businesses below the de minimis threshold, who currently do not have a liability to register, do not have to pay the tax. This change ensures that the policy intent is achieved and reduces the burden of the tax on those businesses who manufacture and/or import plastic packaging below the de minimis threshold (s 52).
- Provide tax reliefs for persons enjoying certain immunities and privileges, such as visiting forces and diplomats, with provision to set administrative requirements in secondary legislation. This will ensure compliance with international tax agreements (s 55).
- Transfer the obligations and entitlements of plastic packaging tax group members, such as completing returns, to the representative member of that group (s 71).
- Require HMRC to notify the representative member of a plastic packaging tax group of the date that applications for and modification of group treatment will take effect. This change means that group registration can take effect from the date of the application, aligning with the timing of registration for the tax (Sch 13).
- Change certain terms used to describe unincorporated bodies to ensure consistency throughout the legislation (Sch 9).
The carbon price support (CPS) rate per tonne of carbon dioxide (CO2) emitted will be frozen at £18 for 2023 to 2024, in Great Britain. This further extends the rate freeze introduced from 1 April 2016.
The aggregates levy rate will be frozen in 2022/23, but it is intended to return the levy to index-linking in the future.
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
The Tax Faculty reflected on the Chancellor's announcements in this essential webinar. Freely available, watch the recording to find out what the Autumn Budget 2021 could mean for you and your clients.