Budget 2020 – Excise duties

Alcohol duty

Rates

Duty rates on beer, spirits, wine and cider will be frozen. The rates are available here.

Post-EU exit alcohol review

The Government will publish a call for evidence by the summer to review potential reforms to be implemented after the transition period.

Small Brewersʼ Relief (SBR)

The Government will publish the results of its review into Small Brewersʼ Relief in the spring.

 

Tobacco duty

With effect from 6 p.m. on 11 March 2020:

  • duty rates on all tobacco products will increase by RPI + 2% until the end of this Parliament; and
  • the rate on hand-rolling tobacco will increase by RPI + 6% this year.

The rates are available here.

 

Vehicle excise duty

Rates

The Government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2020. To support the haulage sector, the Government will freeze HGV VED and the HGV road user levy for 2020–21.

The VED rates are available here.

Call for evidence

HMRC have launched a call for evidence as it seeks to reform VED to incentivise the purchase of lower emitting cars. In particular, the Government is consulting on changes to the first licence VED to incentivise the purchase of lower emitting cars and whether VED for motorcycles should reflect their emissions. The call for evidence closes on 3 June 2020.

Zero-emission vehicles (ZEVs)

From 1 April 2020, all ZEVs registered until 31 March 2025 will be exempt from the VED ‘expensive car’ supplement.

Motorhomes

From 12 March 2020, the annual VED liabilities for most new motorhomes will be reduced to a flat rate of £265, which will rise to £270 for 2020–21.

From 1 April 2021, the VED treatment of new motorhomes and vans will be aligned.

 

Fuel duty

Rates

The duty will be frozen for the tenth year in a row. The rates are available here.

Red diesel: removing entitlement

The Government will remove entitlement to the use of red diesel and rebated biofuels from April 2022.

There will be an exception for agriculture (including horticulture, pisciculture and forestry), rail and for non-commercial heating (including domestic heating). The Government will consult on whether the entitlement to use red diesel and rebated biofuels is justified for any other users, e.g. there is a strong case for continued use by ferries carrying paid passengers on the UKʼs rivers and inland waterways, or public entertainment.

Commercial boats on open waters, including ferries and fishing boats, will remain entitled to the Marine Voyages Relief so will not have to pay more for their fuel.

This measure will incentivise businesses to improve the energy efficiency of their vehicles and machinery or look for greener alternatives. To support the development of alternatives that these businesses can switch to, the Budget has also committed to at least doubling the size of the energy innovation programme, accelerating the design and production of innovative clean energy technologies.

Red diesel: prohibition of use for propelling private pleasure craft

Private pleasure craft already pay the standard white diesel rate for propulsion even though they are permitted to put red diesel into their tanks. They will still be entitled to use red diesel for their heating use.

Where they have one tank for propulsion and heating, the Government will explore options that prevent them from having to pay a higher rate of duty on their heating use than they would otherwise have to pay. Details on the implementation of this power will be set out in due course.

 

Air passenger duty

Rates

The rate of APD will increase in line with RPI for 2021–22:

  • short haul rates remain at £13;
  • long haul economy rates, which are £80 with effect from 1 April 2020 will increase by £2 to £82 with effect from 1 April 2021;
  • long haul premium economy rates, which are £176 from 1 April 2020 will increase by £4 to £180 with effect from 1 April 2021; and
  • long haul rates for private jets, which are £528 from 1 April 2020 will increase by £13 to £541 with effect from 1 April 2021.

The rates are available here.

Consultation

Following the announcement in January 2020 that a review of APD would take place, the Government will consult on reform of APD in spring 2020.

 

Gaming duty

The Government will legislate in Finance Bill 2020 to raise the Gross Gaming Yield (GGY) bandings for gaming duty in line with inflation. The revised bandings must be used for accounting periods starting on or after 1 April 2020.