Green taxes
Increases in Landfill Tax and the Aggregates Levy have been confirmed.
The rate of Climate Change Levy will increase in line with inflation.
The changes to the taxation of company cars are also intended to encourage the use of lower emission vehicles.
Changes to VAT fuel scale charges
Cars
Company cars
Landfill Tax (LFT)
Climate Change Levy (CCL)
Aggregates Levy (AGL)
Changes to VAT fuel scale charges
The VAT fuel scale charges for taxing the private use of road fuel have been increased. This is to reflect changes in fuel prices and to ensure that the table of CO2 bands remains aligned with the equivalent tables used for direct tax purposes.
The new rates must be used for VAT return periods beginning on or after 1 May 2008.
Cars
Company cars
Company car drivers will be the largest individual group of employees who will be affected by changes in the 2008 Budget. Most will see their income tax bills increase over the next three years. Employers will face corresponding increases in their Class 1A National Insurance costs.
The Chancellor's drive towards cleaner vehicles, making fewer journeys, goes on. The percentages that are used for calculating the benefit of having a company car will increase in 2008/09 and again in 2010/11 for all but the 'cleanest' cars. The only company car drivers to avoid these increases are those driving cars with CO2 emissions under 130g/km who do not have private fuel provided.
If fuel for private motoring is supplied along with the company car, there will be tax increases in both 2008/09 and 2009/10, with promises of more in subsequent years. From 6 April 2008, where a car's list price is less than £16,900 the tax on the private fuel benefit will be more than the tax on the private use of the car.
The following table shows the increases for an employee with a company car with a list price of £15,000 and CO2 emissions of 200g/km, using petrol.
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The Chancellor has said that the increases in the fuel benefit multiplier for 2009/10 and later years will be at least in line with the retail price index, so the table above assumes a 4% increase.
Landfill Tax (LFT)
It was confirmed today that the standard rate of LFT will increase from £24 per tonne to £32 per tonne from 1 April 2008. It was also announced that the rate will increase by a further £8 per tonne in 2009. This rate of increase is expected to continue until 2011.
Legislation will also be introduced this year to phase out the exemption from LFT for waste disposed to landfill as a result of the reclamation of contaminated land. Applications for certificates of exemption will no longer be accepted from 1 December 2008. In addition, any certificates held after that date will expire on 1 April 2012. Developers and anyone involved in the reclamation of contaminated land will have to commence work and obtain certification prior to 1 December 2008, and ensure that the works are completed before 1 April 2012 to qualify for this relief.
For businesses registered for LFT - which make contributions to environmental bodies registered under the Landfill Communities Fund - the maximum credit for their contributions that can be claimed against their annual landfill tax liability will be reduced from 6.6% to 6.0% from 1 April 2008. Whilst this is a reduction in percentage terms, the significant increase in the standard rate of LFT means that actual contributions are likely to rise by up to £5 million in the coming year.
Climate Change Levy (CCL)
The Chancellor will increase the rates of CCL in line with inflation. From 1 April 2009 taxable commodities will be charged at the following rates:
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In addition, electricity generated from coal mine methane will no longer be exempt from CCL with effect from 1 November 2008.
Aggregates Levy (AGL)
It was confirmed today that the rate of AGL will rise from £1.60 to £1.95 per tonne from 1 April 2008, and rise again to £2.00 per tonne with effect from 1 April 2009.