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VAT and duties

The Spring Budget 2017 had no surprise VAT announcements but the following may impact on most of us one way or another!

VAT Flat Rate Scheme

The Government announced in the Autumn Statement that a new 16.5% rate for businesses where there are minimal expenses, such as many labour-only businesses, was being introduced from 1 April 2017.  This is aimed at levelling the playing field while ensuring the scheme remains relatively straight forward for the small businesses that use it.

VAT registration and deregistration threshold

The VAT registration threshold will increase from £83,000 to £85,000 with effect from 1 April 2017.  The Government also announced that the VAT deregistration threshold will also increase on the same date from £81,000 to £83,000.

VAT on mobile phone use and enjoyment outside of the UK

The Government will remove the VAT use and enjoyment provision for business to consumer mobile phone services to individuals. The aim of this is to resolve the inconsistency where UK VAT is applied to mobile phone use by UK residents when in the EU, but not outside of the EU.

VAT evasion

It was announced that the Government will consult on options to combat missing trader VAT fraud where labour is provided within the construction sector.

Following on from previous announcements, the Government will shortly publish information in relation to them tackling the non-payment of VAT by some overseas traders selling goods online to UK customers.

Alcohol duty rates and bands

The 2017 Spring Budget saw the announcement that from 13 March 2017, the duty rates on beer, cider, wine and spirits will increase by Retail Prices Index (RPI) inflation.  In addition to this, the Government are consulting on the following:

  • Introducing a new duty band for still cider just below 7.5% abv to target white ciders.
  • The impacts of introducing a new duty band for still wine and made-wine between 5.5% and 8.5% abv.

Tobacco duty rates

Duty rates on all tobacco will increase by 2% above RPI inflation with effect from 6pm on 8 March 2017.

In addition to this the Government will introduce a Minimum Excise Tax for cigarettes.  This will target the cheapest tobacco and the rate will be set at £268.63 per 1,000 cigarettes taking effect from 20 May 2017.

Insurance Premium Tax (IPT)

In the Autumn Statement it was announced that IPT will increase to 12% from 1 June 2017.

Fuel duty

As announced in the Autumn Statement, the main rate of fuel duty for petrol and diesel will remain frozen for the seventh successive year, saving motorists around £130 a year.  This is great news, although a reduction in the duty would have been more welcome!

Vehicle Excise Duty (VED), HGV VED and road user levy

With effect from 1 April 2017, VED rates for cars, vans and motorcycles registered prior to April 2017 will increase by RPI.

HGV VED and road user levy rates will be frozen from 1 April 2017.  The Government announced that they will work with the industry to update the levy to reward hauliers that plan their routes resourcefully to incentivise the efficient use of roads.

For more details on what was announced in the 2017 Spring Budget in relation to VAT and other duties, please contact Julie Osborn on 01228 711888.