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VAT and indirect taxes

An overview of changes to common VAT and indirect taxes. 

Fuel duty
The Chancellor announced a freeze in the fuel duty for ‘the remainder of this parliament’. The anticipated increase in September 2014 of 1.61 pence per litre is therefore cancelled. 

The Chancellor went on to announce that by 2015/16 the average motorist will be saving £11 every time they fill their tank or £680 over the course of a year (for a typical motorist).  He also highlighted that ‘by the end of this parliament, on average pump prices will be 20 pence per litre lower than pre 2010’. 

A small business with a van will save an estimated £1,300 per year and a haulier an estimated £21,000 by 2015-16. 

Another fuel duty announcement sees the maintenance of the differential between lower road fuel duty on gases (compressed natural gas, liquid natural gas and biomethane) and the main fuel duty rate until March 2014. The differential between the main fuel duty rate and the rate for liquefied petroleum gas will reduce by 1% each year until 2024. The government will also seek EU approval to apply a reduced fuel duty rate for methanol. 

Vehicle excise duty (VED)
There are major changes to the VED regime. There will be legislation to allow motorists to pay by direct debit annually, biannually or monthly (a 5% surcharge will apply to biannual and monthly payments). Legislation will also be introduced to remove the requirement to issue and display a paper tax disc. These changes will be effective from 1 October 2014. 

Alcohol duty
As previously announced on 17 July 2013, there will be a ban on sales of alcohol below duty plus VAT in England and Wales. The measure will be introduced in spring 2014 and follow a similar system introduced in Scotland by the Alcohol (minimum pricing) (Scotland) Act 2012. 

VAT returns
The government will consult on VAT regulations that require a business to file VAT returns online. The consultation will look at amending the regulations to allow alternative options.

ACCA will provide more in-depth analysis of measures surrounding vehicles (bringing together purchase, running costs and benefits) in the 20 December issue of In Practice. 

We will also highlight VAT rates across Europe; particularly useful for clients involved in exporting to Europe.

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