Excise duties

Fuel duty and the fair fuel stabiliser

With effect from 6pm on 23 March 2011 the current fuel duty escalator is replaced by a fair fuel stabiliser. This is intended to lessen and even out the impact of fuel increases arising as a consequence of the fluctuating price of oil. Instead of the pump price of fuel increasing by between 4 pence and 5 pence in April there is a reduction in the main fuel duty rate of 1 penny per litre. Since the Autumn Statement 2011, the next increase in the cost of fuel, which was planned for January 2012 has been deferred until August 2012, when it will increase by 3 pence per litre, this replaces the planned August increase of 5p.

With motorists hit by ever increasing costs it is suggested by the Government that this will save a motorist driving a Ford Focus £56 in 2011/12 while a haulier should see a reduction of £100 compared to an increase of almost £1,950 under the changes previously announced. However, the Government's supporting documentation did not go as far as to indicate what the cost of fuel increases would be in 2012 as a result of increasing fuel duties.

Stamp duty land tax (SDLT)

As previously announced a new 5 per cent rate of SDLT applies to the purchase of property in excess of £1 million acquired on or after 6 April 2011.

Purchasers who acquire more than one dwelling will have their SDLT based on the mean value of the transaction.  This will be calculated by dividing the number of dwellings by the aggregate consideration, but subject to a minimum rate of 1 per cent. This change takes effect on or after the date on which the Finance Bill receives the Royal Assent.

Carbon price floor

From 1 April 2013 a carbon price floor is to be introduced. Supplies of fossil fuels used in most forms of electricity generation will become liable either to the climate change levy (CCL) or fuel duty from that date. Such supplies will be charged at the relevant carbon price support rate, depending on the type of the fossil fuel used, which will be determined by the average carbon content of each fossil fuel. The carbon support rates will reflect the differential between the future market price of carbon and the floor price determined by the Government.

The 'carbon price support rates' for CCL and, in the case of oils, fuel duty will be equivalent to £4.94 per tonne of carbon dioxide. However, suggested rates for the following two years are £7.28 per tonne of carbon rising to £9.86 in 2015/16.

The purpose of this change is to encourage additional investment in low-carbon power generation by providing greater support and certainty to the carbon price.

The Autumn Statement 2011 revealed that energy intensive industries get £250 million assistance in the form of relief from carbon-related taxes.

Tobacco products

With effect from 6pm on 23 March 2011 the rates of duty on all tobacco products increase. For cigarettes, the quantity-based duty is increased by 25 per cent above retail inflation, whilst the price-based duty is reduced from 24 per cent to 16.5 per cent of the retail price. Duty on hand-rolling tobacco increases by 12 per cent while for other tobacco products the rate of duty increases by 2 per cent above retail price inflation. This announcement follows on from the March 2010 Budget when it was announced that tobacco duty rates would increase by 2 per cent above retail price inflation.

Typically this will add 33 pence to a packet of premium cigarettes, 50 pence to a packet of economy cigarettes, 67 pence to a packet of hand rolling tobacco and 10 pence to a packet of 5 small cigars.

High and low strength beer

A new duty commences on and after 1 October 2011 regarding beer exceeding 7.5 per cent alcohol by volume (abv). This new duty will be known as High Strength Beer Duty (HSBD) and is a levy over and above existing beer duty. The rate will be 25 per cent of the general beer duty at the time of introduction. This will have the effect of increasing the cost of these beers by about 25 pence on a 500 ml can of beer at 9 per cent abv.

However, a lower rate of general beer duty is to be introduced that will see the cost of duty reduced for beer exceeding 1.2 per cent abv but not exceeding 2.8 per cent abv.  These measures are aimed at tackling problems such as drink driving. Further, it is envisaged that HSBD will reduce the availability and affordability of "super strength" lagers associated with problem drinking.

Aggregates levy rate

The levy increase planned for 1 April 2011 is repealed but from 1 April 2012 the aggregate levy increases by 10 pence per tonne to £2.10.

Climate change levy (CCL)

A number of changes are introduced that affect:

  • Those who are electrified freight train operators and a limited number of operators of public passenger rail services
  • Suppliers of taxable commodities liable to account for CCL and recyclers of aluminium and steel that currently claim exemption from the levy, and
  • Gas and electricity utilities, suppliers of solid fuels and liquefied petroleum gas and energy-intensive businesses with climate change agreements.

If you are in any of these industries or think you are affected please contact us for further details of the announcements.