Spring Budget 2024 – Fuel Duty rates

In the Spring Budget, the Chancellor extended the fuel duty cut for a further 12 months to help support households and businesses at a time of high oil prices. The Chancellor acknowledged that the rising price of fuel places a huge burden on families and businesses.

The government was under considerable pressure from consumer and business groups to try and alleviate the pain of high fuel prices. This means that the temporary cut in the rates of fuel duty introduced at Spring Statement in March 2022, and extended multiple times are to be extended for a further 12 months until 22 March 2025.

The assumed inflation increases in fuel duty in 2024-25 will not now take place. This will maintain fuel duty rates at current levels for another year and represents a reduction of around 7p per litre for main petrol and diesel rates in comparison to previous plans.

Source:HM Treasury | 05-03-2024

New crackdown on illicit tobacco

HMRC has continued to tackle the UK’s most notorious hotspots for the sale and supply of illicit tobacco as part of its overall remit to tackle tax fraud. This has resulted in the seizure of more than 27 million illicit cigarettes and 7,500kg of hand-rolling tobacco.

These seizures have taken place under Operation CeCe in its first two years of action. Operation CeCe is a joint HMRC-National Trading Standards operation which has been working to seize illicit tobacco since January 2021.

New legislation has also come into effect from 20 July, which could see penalties of up to £10,000 for any businesses and individuals who sell illicit tobacco products. The sanctions will bolster the government’s efforts to tackle the illicit tobacco market and reduce tobacco duty fraud.

Illicit tobacco is defined as any tobacco product that is sold in the UK without the payment of excise duty.

HMRC’s Deputy Director for Excise and Environmental Taxes, said:

'Trade in illicit tobacco costs the Exchequer more than £2 billion in lost tax revenue each year. It also damages legitimate businesses, undermines public health and facilitates the supply of tobacco to young people.

These sanctions build on HMRC’s enforcement of illicit tobacco controls, will strengthen our response against those involved in street level distribution, and act as a deterrent to anyone thinking that they can make a quick and easy sale and undercut their competition.'

Source:HM Revenue & Customs| 24-07-2023

Alcohol duty changes

Changes in the way alcohol is taxed came into effect on 1 August 2023. The new system of calculating alcohol duty for all alcoholic drinks will be made using standardised tax bands based on alcohol by volume (ABV). This replaces the previous alcohol duty system, which consisted of four separate taxes covering beer, cider, spirits, wine and made-wine.

These changes are expected to make the system fairer and encourage more new products to enter the market. The new system sees the creation of six standardised alcohol duty bands across all types of alcoholic products and apply to all individuals and businesses involved in the manufacture, distribution, holding and sale of alcoholic products across the UK.

There is also more help for the hospitality industry with an increase in the draught relief duty differential. This will reduce alcohol duty on qualifying beer and cider by 9.2%, and by 23% on qualifying wine-based, spirits-based and other fermented products, sold in on-trade premises such as pubs and restaurants. These changes also took effect from 1 August 2023 and mean that individuals who drink draught products in on-trade venues (such as pubs) will pay less tax than on the equivalent non-draught product in off-trade venues (such as supermarkets).

To support wine producers and importers in moving to the new method of calculating duty on their products, temporary arrangements will be in place for eighteen months from 1 August 2023 until 1 February 2025.

Source:HM Revenue & Customs| 10-07-2023