2010 Budget: Excise duties & environmental taxes

Excise Duties, Environmental and Transport Taxes

Aggregates Levy – NI Credit Scheme

The Government intends to extend the Aggregates Levy Credit Scheme in Northern Ireland for ten years, from 1 April 2011. This measure will be legislated in a Finance Bill to be introduced as soon as possible in the next Parliament.

Aggregates Levy – Rate

The rate of aggregates levy will increase from £2.00 per tonne to £2.10 per tonne with effect from 1 April 2011.

Air Passenger Duty (APD) – Duty rates

As announced at the 2008 Pre-Budget Report, APD rates for the four destination bands will increase from 1 November 2010. This change will apply to flights departing from the UK (subject to certain exemptions) on or after 1 November irrespective of when the flight was booked or purchased. A list of countries by destination band is contained in Appendix 1 of HMRC Notice 550, Air Passenger Duty, which is available on HMRC website.

Climate Change Levy (CCL) – change in rates

Legislation will be introduced in Finance Bill 2010 to increase the rates of CCL broadly in line with inflation to:

Alcohol Duty – amendments to Cider duty

Legislation will be introduced in Finance Bill 2010 to provide a power to amend the definition of cider which may be needed in order to protect the integrity of the cider definition.

Alcohol Duty – Rates

Legislation will be introduced in Finance Bill 2010 to provide for the annual setting of duty rates for Alcohol. Duty rates for all still ciders, and sparkling cider exceeding 1.2 per cent alcohol by volume (abv) but not exceeding 5.5 per cent abv, will increase by 10 per cent above inflation. Duty rates for all other alcoholic drinks will increase by 2 per cent above inflation. The Small Brewers Relief scheme will continue to provide 50 per cent duty relief to the smallest brewers.

Bingo Duty, Amusement Machine License Duty (AMLD) and Gaming Duty

Legislation will be introduced in Finance Bill 2010 to:

• reduce the rate of bingo duty from 22 per cent to 20 per cent
• increase the amounts of AMLD in line with inflation
• raise the gross gaming yield (GGY) bandings for gaming duty in line with inflation

Hydrocarbon Oils Duty – Rates

Budget 2010 announces that the 2010-11 increase will be implemented in stages in order to ease pressure on incomes at a time when other prices are rising. The main fuel duty will increase by 1p per litre on 1 April and 1p per litre on 1 October 2010, then by 0.7p per litre on 1 January 2011, with consequential effects on rebated fuels and road fuel gases. The main fuel duty will increase by a further 1p per litre above indexation in April 2014 with consequential effects on rebated fuels and road fuel gases. The duty on leaded petrol is increased by the same amount as main road fuels, 1p per litre on 1 April and 1p per litre on 1 October 2010, then by 0.76p per litre on 1 January 2011, and that duty on aviation gasoline is increased by 3.78p per litre on 1 April 2010.

Tobacco Products Duty – Long cigarettes

The way long cigarettes are treated for duty purposes is to be changed. Where cigarettes are longer than 8cm (excluding tip), each additional 3cm (or part thereof) is treated as another cigarette for duty purposes. For example a cigarette 12cm in length would be treated as three cigarettes. This is a technical change which is designed to stop a tax avoidance method.

Tobacco Products Duty – Rates

The rates of Tobacco Products Duty (that is the duty on cigarettes, cigars, hand rolling tobacco, other smoking tobacco and chewing tobacco) have been increased by 1% in real terms with effect from 6pm on Budget day.

Landfill Tax – Lower rate criteria

The maximum credit that landfill site operators may claim against their annual landfill tax liability for contributions to enrolled environmental bodies under the LCF will change from 6 per cent to 5.5 per cent with effect from 1 April 2010. This should result in an increase to the maximum value of the LCF in line with inflation, from £72 million in 2009-10 to a potential value of £74.25 million of credit claimable for 2010-11.

Landfill Tax – Lower Rate Criteria

The Government has announced its formal response to the Budget 2009 consultation on modernising landfill tax legislation. In summary:

• Wastes qualifying for the lower rate of tax will remain broadly unchanged. A number of wastes that the consultation suggested might be standard rated will not be
• Legislation will provide for publication and review of qualifying criteria for the lower rate. HM Treasury will take account of these criteria in future when listing materials qualifying for the lower rate of tax in an Order
• Minor changes to the lower rate Order will be made from 1 October 2010, to update terminology and make amend coverage to reflect developments since 1996. The Government will publish the changes in draft by June and invite comments from affected stakeholders
• There are no plans to proceed with changes to the way that waste disposal is defined in the legislation for tax purposes, as originally set out in the consultation

Landfill Tax – Rates

The standard rate of landfill tax will increase by £8 per tonne to £56 per tonne for relevant disposals of waste made, or treated as made, on or after 1 April 2011. The increase was announced at Budget 2009 when the Government indicated that the rate would increase by £8 per tonne on 1 April each year from 2011 to 2013 (inclusive). Budget 2010 announced that the standard rate will increase by a further £8 per tonne in 2014-15.

Landline Duty

Finance Bill 2010 will introduce a duty on Landlines (local loops). It will be payable from 1 October 2010 at a rate of 50 pence per month. The duty will apply when the local loop is made available for use and will be payable by the owner of the local loop. The owner of the local loop may recoup the duty from the wholesaler, retailer or end-user. People on an officially recognised social telephony scheme will be exempt from the duty. Lines used exclusively for television services will be exempt.

Powers Review – Excise compliance checks

This measure updates the compliance checking framework for excise duties, covering information and inspection powers, record-keeping rules and time limits. The Government intends to legislate this in a Finance Bill to be introduced as soon as possible in the next Parliament.

Powers Review – Interest harmonisation

Corporation Tax (except for quarterly instalment payments) and Petroleum Revenue Tax are to be brought within the harmonised interest regime. This will complete the legislation started by Finance Act 2009.