Other Changes
Duties
Tobacco duty
From 6pm on 24 November 2008, tobacco duty rates increase by:
| Product |
Typical unit |
Excise duty including VAT at 15% on duty |
| Cigarettes (premium) |
Packet of 20 |
17p |
| Cigars |
Packet of 5 |
5p |
| Hand rolling tobacco |
25g |
13p |
| Other smoking and chewing tobacco |
25g |
8p |
Alcohol
From 1 December 2008 duties on alcohol will increase by 8 percent.
| Product |
Typical unit |
Excise duty including VAT at 15% on duty |
| Beer |
Pint |
3p |
| Wine |
75cl bottle |
13p |
| Sparkling wine |
75 cl bottle |
17p |
| Spirits |
70 cl bottle |
53p |
| Cider and perry |
Litre |
3p |
The Small Brewers Relief Scheme will continue to provide 50 percent duty relief to the smallest brewers. Please note that these are only the main rates. Further detail of all the rates will be found in PBRN 28 issued with the Pre Budget Report.
Air passenger duty
The basis for this duty will change from 1 November 2009 to be a duty based on the mileage travelled away from the UK. The duty changes on this date and also further increases with effect from 1 November 2010. These changes will affect all air passengers, airlines and travel agents.
| Band and distance of capital city of destination country in miles from the UK |
In the lowest class of travel (reduced rate) |
In other than the lowest class of travel (standard rate) |
|
On and after 1 Nov 2009 |
On and after 1 Nov 2010 |
On and after 1 Nov 2009 |
On and after 1 Nov 2010 |
| Band A (0-2000) |
£11 |
£12 |
£22 |
£24 |
| Band B (2001-4000) |
£45 |
£60 |
£90 |
£120 |
| Band C (4001-6000) |
£50 |
£75 |
£100 |
£150 |
| Band D over 6000 |
£55 |
£85 |
£110 |
£170 |
The countries by band may be found in the Pre Budget Report PBRN20.
Fuel duties
Fuel duty rate changes from 1 December 2008 and 1 April 2009 are:
| Fuel type |
Duty rate(pence per litre, unless stated) |
| Current rate |
Increase on or after 1 December 2008 |
On and after 1 April 2009 |
| Ultra-low sulphur petrol/diesel |
50.35p |
2p |
1.84p |
| Sulphur-free petrol/diesel |
50.35 |
2p |
1.84p |
| Bio diesel |
30.35 |
2p |
1.84p |
| Bio ethanol |
30.35 |
2p |
1.84p |
The duty for leaded petrol also increases by 2p from 1 December 2008.
These rates will be further increased on 1 April 2010 by 0.5pence per litre above indexation in that year.
Other rates for light oil (other than unleaded petrol); aviation gasoline; light oil delivered to an approved person for use as furnace oil; marked gas oil; fuel oil; heavy oil and kerosene may be found in Pre Budget Report PBRN19.
Changes to the standard rate of VAT
The standard rate of VAT will reduce from 17.5% to 15% with effect from 1 December 2008. The 15% rate will have effect for:
- Supplies of goods and services made on or after 1 December 2008.
- Imports on or after 1 December 2008.
- Acquisitions of goods from other Member States on or after the same date.
The standard rate of VAT will revert to 17.5% with effect from 1 January 2010.
Amendments are being made to the flat rate scheme for small businesses and the law relating to credit notes to ensure that taxpayers are not disadvantaged.
VAT: Bespoke retail schemes threshold
The upper limit for using one of the VAT retail schemes has been £100 million since 2000. This limit will increase to £130 million with effect from 1 April 2009.
Bespoke agreements agreed between HMRC and retailers whose annual turnover is between £100 million and £130 million will continue in force until the end of the agreement.
Simplifying the entry and leaving rules for the VAT flat rate scheme
The VAT flat rate scheme enables businesses to pay VAT as a fixed percentage of turnover, at a rate lower than the standard rate. At the moment there are two tests to be satisfied to see if a small business may use the VAT flat rate scheme.
- Firstly a business has to check if its taxable turnover is less than £150,000.
- Secondly a business has to check that its total income is less than £187,500.
The second test is to be abolished with effect from 1 April 2009.
A business has to leave the VAT flat rate scheme if its annual income exceeds £225,000. Income is currently not defined in the VAT legislation. Under the new rules it will be computed by the same method used by the business to calculate its VAT - if a business is on an invoice basis, then this will be the basis applied.
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