ICAEW Tax Faculty provides analysis of the announcements relating to duties in the 2018 Budget.
Fuel duty: rates
Fuel duty rates will remain frozen for the tax year 2019/20.
Following an internal review, the government will extend the current differential between alternative and main road fuel duty rates until 2032 to support the decarbonisation of the UK transport sector, subject to review in 2024.
Vehicle excise duty (VED) rates for cars, vans, motorcycles and motorcycle trade licences will be increased by the RPI with effect from 1 April 2019.
VED for heavy goods vehicles (HGVs) will be frozen for the tax year 2019/20.
The government has published a summary of responses from the consultation on VED reform for vans, aimed at incentivising van drivers purchasing a new van to make the cleanest choices. The response sets out proposals to introduce environmental incentives from April 2021. The key decisions that the government has taken are to:
- further develop its understanding of the impacts of the Worldwide Harmonised Light vehicles Test Procedure (WLTP) on CO2 emissions for vans, ahead of announcing the new rates and bands, for introduction from April 2021;
- ensure the new system takes into account the weight of the van by introducing a two-category approach; and
- provide ongoing incentives, beyond the first year, for new zero emission, ultra-low emission and other alternatively fuelled vans from April 2021.
VED: exemption for blood bikes
From April 2020, motorcycles and cars owned by the Nationwide Association of Blood Bikes, used for the transportation of medical products, will be exempt from VED. This will align the tax treatment of the transportation of blood and medical supplies with other emergency vehicles.
HGV road user levy
From 1 February 2019, HGVs that meet the latest Euro VI emissions standards will be eligible for a 10% reduction in the cost of the HGV levy. Those HGVs that do not meet the latest emissions standards will see their liability increase by 20%, except where the rate is already set at its maximum rate allowable under European legislation.
Air passenger duty rates
Long-haul APD rates will rise in line with RPI with effect from 1 April 2020. Short-haul rates will not rise. The rates for long-haul economy will increase by £2, and the rates for those travelling in premium economy, business and first class will increase by £4. Those travelling long-haul by private jets will see the rate increase by £13.
Soft drinks industry levy
From April 2019, the raising of penalties will be permitted where businesses registered for the soft drinks industry levy (SDIL) do not submit a timely quarterly return. Quarterly returns covering the period April to June 2019, and which are received late or not at all after the due date of 30 July 2019, will be subject to the penalty.
The first late return will lead to a penalty for a fixed amount of £100. For the second late return within a 12 month period, the fixed amount is £200. A third late return within 12 months of the second means a fixed penalty of £300, and the penalty for a fourth or subsequent late return within 12 months of the most recent late return is a fixed amount of £400. Tax-geared penalties start when a return is six months late or more.
Remote gaming duty
In order to ensure funding for public services is maintained following the implementation of a £2 maximum stake on B2 machine games, the rate of remote gaming duty will increase to 21%. Both the reduction in maximum stake and increased duty rate will take effect from 1 October 2019.
Gaming duty accounting periods and bands
The requirement for casinos to pay gaming duty on account and to allow the carry forward of losses between accounting periods will be removed. The return period for gaming duty will remain 6 months. The bands to determine payment of gaming duty will be frozen from April 2019, while the changes to gaming duty accounting periods are implemented.
Tobacco duty rates
The duty rates for all tobacco products were increased by 2% above RPI inflation from 18:00 on 29 October 2018, although for hand-rolling tobacco, this rise was 3% above RPI. The minimum excise tax was also set at £293.95 per 1,000 cigarettes from the same time.
A new duty category, ‘tobacco for heating’, will be introduced from 1 July 2019 at a rate of £234.65 per kg, the same level as hand-rolling tobacco. In these products processed tobacco is heated (but not burned like conventional tobacco) to produce, or flavour, vapour.
The government will act on the recommendations of the recent All Party Parliamentary Group report by supporting the creation of a UK-wide Anti-Illicit Trade Group. This will bring together senior officials, representing each of the four parts of the United Kingdom, to share best practice and develop a national strategy for tackling this criminal activity and the societal ills that it fuels.
Alcohol duty: rates
Duty rates on beer, most cider and spirits will be frozen. However, duty on wine and made-wine rates at or below 22% alcohol by volume (abv); and sparkling cider and perry exceeding 5.5% abv but less than 8.5% abv will rise by RPI inflation from 1 February 2019.
A new duty band for still cider and perry of a strength of at least 6.9% but not exceeding 7.5% alcohol by volume will be introduced at £50.71 per hectolitre with effect from 1 February 2019, to encourage the production and consumption of lower-strength ciders.
Alcohol duty: simplification
The government will not be undertaking further consultation in 2018/19 to simplify the administration of alcohol duty. In the longer term, it remains committed to consulting on and implementing reforms to this duty, and reducing the administrative burden on businesses.
Small brewery relief
The current structure of the small brewery beer relief will be reviewed to ensure it is supporting growth in the sector.
Post duty point dilution
The practice of diluting certain alcohol products after excise duty has been calculated is to be banned with effect from April 2020, to ensure a level playing field with other duty regimes.
The government plans to publish draft primary legislation and regulations in summer 2019. The change will have effect after regulations have been laid, following Royal Assent of FB 2019-20.