Indirect Tax

Detailed Budget Measures

Fuel duty

The fuel duty increase that was due to take effect on 1 September 2013 has been cancelled.

Legislation to reflect the cancellation will now be introduced in Finance Bill 2013.

For more details see the Tax Information and Impact Note.

CCH Comment:

Like many measures announced in the Budget, cancelling the proposed increase in fuel duty that that was due in September 2013 is unlikely to have a major effect on motorists when compared to what could happen to the price of fuel if demand rises or supply falls.

Stanley Dencher, Tax Writer.

Industry Comment:

Whilst the freezing of fuel duty is welcome to the beleaguered motorist, the offsetting risk is the exchange rate with the US dollar. As the British pound falls, then petrol prices, which are dollar driven, are forced higher as witnessed over the last two months.

Moving into the wider transport industry, UK hauliers can also be assisted by the freeze as they are competing with their European counterparts, who in turn are suffering from the inflated dollar. By holding back on fuel duty this will help create a more level playing field with Europe.

Phil Harrold, Automotive Partner at PwC.

Alcohol duty

Duty rates on beer will decrease by 6% for low strength beer (less than 2.8% abv), 2% for the standard rate of beer duty (between 2.8% and 7.5% abv) with effect from 25 March 2013. This will reduce the price of an average strength pint by 1p.

The duty rates for spirits, wine and made-wine, cider and perry will increase by 2% above the rate of inflation (based on RPI) with effect from 25 March 2013. This will add 2p to the price of a litre of cider, 10p to the price of a bottle of wine and 38p to the price of a bottle of spirits.

For more details see the Tax Information and Impact Note.

Tobacco duty

The duty rates for all tobacco products will be increased by 2% above the rate of inflation (based on RPI) from 6pm on 20 March 2013.

VAT: revalorisation of fuel scale charges

A statutory instrument laid on 20 March 2013 will revalorise fuel scale charges with effect from 1 May 2013. The fuel scale charges are published in OOTLAR.

VAT: revalorisation of registration and deregistration thresholds

The VAT registration and deregistration thresholds will be increased in line with inflation so that with effect from 1 April 2013:

The simplified reporting requirement (three line accounts) for the income assessment return will continue to be aligned with the VAT registration threshold.

For the 2013-14 tax year and onwards, small businesses will be able to use the new simpler income tax cash basis intended to simplify the way in which small businesses can calculate their trade profits. The eligibility conditions for the cash basis will be linked to the VAT registration threshold in place at the end of the tax year.

VAT: changes to the place of supply rules

Legislation will be introduced in Finance Bill 2014 to tax intra-EU business to consumer supplies of telecommunications, broadcasting and e-services in the Member State in which the consumer is located. These services are currently taxed in the Member State in which the business is established. The changes will take effect from 1 January 2015 and implement already agreed EU legislation into UK legislation, ensuring that these services are taxed fairly in the Member State of consumption.

To save the need for businesses affected by these changes to register for VAT in other Member States, a Mini One Stop Shop will also be introduced from 1 January 2015. This is an IT system that will give businesses the option of registering in just the UK and accounting for VAT due in other Member States using a single return.

For more details see the Tax Information and Impact Note