The Budget 2013 - Indirect Tax Measures

In Indirect Tax terms, the 2013 Budget was predictably lack lustre compared to previous years (who can forget the 2012 'Pasty Tax' saga?) and offered few surprises or overly contentious announcements. In this short guide, Gemma Gower, Mitchell Charlesworth's VAT Expert analyses the main Indirect Tax measures announced in this year's Budget 2013:
Gemma Gower
  • Fuel Duty:

The good news is that the pre-announced Fuel Duty increase, due to take effect on 1 September 2013 has been cancelled.  Fuel Duty has been frozen following a high profile series of Duty increase postponements since the last Fuel Duty increase in January 2011, costing the Treasury an estimated £6bn in revenue.

The news has been welcomed by consumers and industry representatives alike, although the RAC estimate that 59% of pump price still ends up in the Treasury coffers once Duty and VAT has been taken into account.

  • Tobacco Duty:

Duty rates for all tobacco products will be increased by 2% above the rate of inflation (RPI) which will take effect from 6pm on 20 March 2013.

  • Alcohol Duty:

The duty rates for spirits, wine, cider and perry will also increase by 2% above the rate of inflation (RPI) which will take effect from 25 March 2013.  This will add 2p to a litre of cider, 10p to a bottle of wine and 38p to a bottle of spirits.

These planned rises or the 'alcohol duty escalator' however does not apply to Beer, which will seen a reduction in Duty, by 1p per pint from 25 March.  According to the Government, 'Pubs play an important role in communities, contributing to the social life of their locality and offering an environment that encourages responsible alcohol consumption'.  Although some of us wine and spirit drinking pub-goers are a little disgruntled at the announcements, it is overall good news for the industry in general.

  • Fuel Scale Charges:

HMRC have announced that Fuel Scale Charges will change with effect from 1 May 2013.

  • VAT Registration and Deregistration Limits:

> The VAT registration threshold has been increased in line with inflation to £79,000 with effect from 1 April 2013.

> The VAT deregistration threshold has been increased in line with inflation to £77,000 with effect from 1 April 2013.

> The registration and deregistration thresholds for relevant acquisitions from other EU Member States will also increase to £79,000.

  • Changes to Place of Supply Rules:

The Government have confirmed that Legislation will be introduced in the Finance Bill in 2014 to 'tax intra-EU business to consumer supplies of telecommunications, broadcasting and e-services in the Member State in which the consumer is located' from 1 January 2015.  These services are currently subject to VAT in the Member State in which the business is established.

HMRC will also introduce a Mini One Stop Shop from 1 January 2015.  This is an IT system that will allow affected businesses to register for VAT in the UK and account for VAT due in other Member States using a single return.  This is great news for businesses concerned about the additional administrative burden that these changes may cause.

  • Overall:

The Budget made for pretty bleak reading on the indirect tax front - apart from the scrapping of the proposed hike in fuel duty, and the reduction in duty rates for beer, we are likely to be worse off in overall terms.  Oh well.  Anyone for a pint?

For more information about Mitchell Charlesworth's VAT services, please contact Gemma Gower on tel: 0151 255 2300 or email:

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