Budget 2016 – VAT & Duties

VAT

The VAT registration threshold will increase from £82,000 to £83,000 from 1 April 2016, and the VAT deregistration threshold will increase from £81,000 to £82,000.

The other VAT announcement of note was that HMRC will be given powers to clamp down on the VAT being evaded every day by overseas vendors who fail to account for VAT on their UK sales on online marketplaces such as Amazon or EBay.  HMRC will have a toolbag of anti-avoidance powers, which will include the ability to force overseas vendors to appoint a UK representative, the power to ask for security to cover their potential VAT liability, and even the power to make the online marketplaces jointly and severally liable for VAT that is lost through a vendor’s wrongdoing.

 

Fuel and Alcohol Duties

The announcement of a freeze in fuel duty for a further year was a surprise to many.  Beer, spirit and most cider duties were also frozen in cash terms, and duty rates on wine and strong sparkling cider were only increased by inflation.

 

Insurance Premium Tax

The standard rate of Insurance Premium Tax will increase by 0.5% to 10%, but not until 1 October 2016. The money raised from this increase will be invested in flood defence measures, which includes projects to be undertaken in Carlisle and Cumbria.

 

Sugar Tax

A Soft Drinks Industry Levy (or Sugar Tax) will be brought in, although not until 2018.  The long lead time is intended to give soft drinks manufacturers and importers the opportunity to change their products so as to reduce their sugar content.  A consultation is to be undertaken on exactly how the tax will be charged, but there is expected to be an exclusion for small producers.

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Jan 24

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