UK: Budget Summary: Indirect Taxes And Stamp Duty

Last Updated: 22 March 2000
  • VAT rates and thresholds

The following amendments are made to VAT thresholds and rates. These changes are applicable from 1 April 2000.

Value Added Tax:

2000-2001

1999-2000

Standard rate

17.5%

17.5%

Annual registration limit

£52,000

£51,000

Deregistration limit

£50,000

£49,000

Registration/deregistration limit for EU purchases

£52,000

£51,000

  • Cigarettes and alcohol
 

Budget increase (pence)

Petrol (per litre)

2p

Cigarettes (pack of twenty)

25p

Pipe tobacco (25 gram pack)

13p

Beer (per pint)

1p

Wine (per bottle)

4p

Also, as previously announced, legislation is to be included in the Finance Bill to introduce pack marks on cigarettes and hand rolling tobacco to distinguish those packs on which UK excise duty has been paid.

The mark will also indicate the date by which the packs must be sold. This is to prevent the current practice, by which duty increases imposed by the budget are forestalled, of holding increased stocks in customs warehouses in the months preceding a budget and paying duty at the lower rate shortly before the increase is announced.

Following the introduction of the pack marks the possession of unmarked packs, other than for specific cases such as those imported by travellers outside the UK for their personal use, will become a criminal offence and will carry fines of up to £5,000. Similar fines will attach to the criminal offence of using, or allowing the use of, premises for the sale of unmarked products.

Cigars, pipe tobacco and chewing tobacco are not included in the scheme.

  • Climate change levy

The levy is to be applied from 1 April 2001 to energy supplied to industrial and commercial consumers, and will require suppliers of energy products to register and pay to Customs the levy that will be due. The levy will be applied as a specific rate per nominal unit of energy.

Fuel

Pence/kWh

Coal

0.15

Gas

0.15

Electricity

0.43

Liquid petroleum gas

0.07

The domestic use of energy and energy used for public transport is excluded from this charge, and there are a number of other exemptions. An 80% discount is given to energy intensive sectors which agree energy efficiency targets that meet the government’s criteria.

  • Disposal of capital assets by overseas businesses

A new anti-avoidance provision has been introduced from 21 March 2000 which will require overseas businesses in certain circumstances to convert the sale of capital assets to turnover for VAT registration purposes.

  • Aggregates levy

From 1 April 2002 an aggregates levy will be introduced at a flat rate of £1.60 per tonne. It will apply to any sand, gravel or crushed rock extracted in the UK or its territorial waters or imported into the UK. It will not apply to clay, shale, slate, metals, metal ores, gemstones, semi-precious stones and industrial minerals. There are also various exemptions and reliefs available.

  • Stamp duty

The Chancellor has announced an increase in the rates of stamp duty on sales of property (excluding shares) for more than £250,000.

The rates are:

 

1999/00

2000/01

Up to £60,000

nil

nil

Over £60,000 up to £250,000

1%

1%

£250,000 up to £500,000

2.5%

3%

Over £500,000

3.5%

4%

In addition, the Chancellor has introduced a number of anti-avoidance measures to counter, amongst others:

  • Transfers of land or buildings in consideration for other forms of property
  • Exploitation of the definition of a group
  • Transfers of land for shares of lower value
  • The use of redeemable shares in company reorganisations

Also, in order to boost research and development, the transfer of intellectual property is now exempt from stamp duty for instruments executed on or after 28 March 2000.

For further information, speak to your usual KPMG tax contact.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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