Duties

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.

As part of the Autumn Statement measures the Chancellor announced that the duty rates on beer, cider, wine and spirits would be frozen at the current rates until 1 August 2024. This change took effect from 1 February 2024 and will last for 6 months.

The alcohol duty freeze will mean that more than 38,000 pubs will benefit. Not increasing alcohol duty in line with inflation will create an effective saving of approximately 3p on the duty applied to a typical pint of beer, 2p on a pint of cider, 4p on a glass of whisky, or 18p on a bottle of wine.

The announcement of the alcohol freeze follows the simplification of alcohol duty system that was completed August 2023. This resulted in the creation of standardised tax bands based on alcohol by volume which created tax cuts on a number of popular drinks, for example, sparkling wines and ready-made drinks.

There were further changes that took effect from 1 August 2023 that resulted in individuals who drink draught products in pubs and other venues pay less tax than if buying the equivalent non-draught product in off-trade venues (such as supermarkets).

This was part of the government’s Brexit Pubs Guarantee commitment for every pint in every pub to pay less duty than their supermarket equivalent.

The Exchequer Secretary to the Treasury said:

‘The great British pub remains a critical part of communities across the country, that’s why we’re helping to keep costs low by freezing alcohol duty, reducing business rates, and supporting on energy costs.

Our decisive action has also helped to more than halve inflation last year, protecting pubs and other businesses from the higher costs they would have otherwise faced.

And we need to stick to our plan, so we can deliver the long-term change our country needs to deliver a brighter future for Britain and improve economic security and opportunity for everyone.’

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.'

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.

There are special procedures for importing goods into the UK. Following the end of the Brexit transition period on 31 December 2020, the process for importing goods from the EU effectively mirrors the process for all other international destinations.

A number of easements to help ensure a smooth transition for goods coming from the EU after Brexit, ended on 31 December 2021. This means that since 1 January 2022, businesses are no longer able to delay making import customs declarations under the Staged Customs Controls rules that applied during 2021.

The changes that came into force on 1 January 2022 include:

• A requirement for full customs import declarations for all goods at the time businesses or their courier/freight forwarder bring them into Great Britain, except if they are non-controlled goods imported from Ireland to Great Britain
• customs controls at all ports and other border locations
• requirement for a suppliers’ declaration proving the origin of goods (either UK or EU) if they are using the zero tariffs agreed in the UK’s trade deal with the EU
• commodity codes, which are used to classify goods for customs declarations, are changing

There are different rules in place for the movement of goods into, out of or through Northern Ireland.

Affected businesses should ensure that they consider as a matter of urgency how they are going to submit customs declarations and pay any duties that are due. Businesses can appoint an intermediary, such as a customs agent, to deal with their declarations or can submit them directly although this can be complex for businesses unused to the process.

There is a ‘Simplified Declarations’ authorisation from HMRC that allows some goods to be released directly to a specified customs procedure without having to provide a full customs declaration at the point of release. However, this needs specific authorisation from HMRC and there are also other requirements that must be met.