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Budget 2021: Indirect Taxes

Freezing of duties

A number of duties, rates and levies have been frozen for 2021/22:

  • All alcohol duty rates

  • Fuel duty (for the eleventh consecutive year)

  • The aggregates levy


Additionally, the Carbon Price Support rate per tonne of CO2 emitted will be frozen to £18 for 2022/23. It had already been frozen for 2021/22.


Landfill

The standard and lower rates of Landfill tax will increase with the Retail Prices Index, rounded to the nearest 5p.


The value of the Landfill Communities Fund for 2021/22 will be £34.5 million. This is a tax credit scheme that allows operators to claim a credit in exchange for a contribution to certain environmental bodies. The cap on contributions by landfill operators remains unchanged at 5.3% of their Landfill Tax Liability.


Red diesel and biofuels

The entitlement to use red diesel and rebated biofuels will be largely removed from 1 April 2022, with exceptions for specified sectors, e.g. agriculture. Fuel duty will be extended to biofuels and fuel substitutes used in heating from 1 April 2022.


Vehicle Excise Duty

VED for cars, vans, motorcycles and motorcycle trade licences will increase in line with the Retail Price Index from 1 April 2021. However, in order to support the haulage sector with the Covid-19 recovery efforts, VED for heavy goods vehicles will be frozen for 2021/22, and the heavy goods vehicle levy will be suspended for a year from 1 August 2021.


Tobacco Duty

The Finance Bill will consolidate the changes announced in November 2020, i.e. to increase the duty rates on all tobacco products by 2% above the Retail Price Index. The duty rate for hand-rolling tobacco increased by an additional 4% above this and the minimum excise tax by an additional 2%. The Budget confirmed that there were no additional increases above these rates.


Plastic packaging tax

A new plastic packaging tax will be introduced from 1 April 2022. This will be a charge at the rate of £200 per tonne of plastic packaging that contains less than 30% recycled plastic content.







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