2006 Pre-Budget Report Summary

• Personal tax

• Employment issues

• Corporate & Business Tax

• Capital taxes

• VAT

• Environmental Measures

• Other Matters

Environmental Measures

Air Passenger Duty (APD)

APD rates will be increased from 1 February 2007. The new rates of duty will be:

• for passengers flying to destinations in the European Economic Area, the European Common Aviation Area, countries applying to join the European Union, and Switzerland, £10 in the lowest class of travel and £20 otherwise

• for passengers flying to other destinations, £40 in the lowest class of travel and £80 otherwise.

Landlords Energy Saving Allowance (LESA)

In 2004, the LESA was introduced, which provides an allowance of up to £1,500 for landlords who invest in cavity wall, loft, solid wall and hot water system insulation, as well as draught proofing insulation.

Following consultation, the government no longer intends to reform the wear and tear allowance by making it conditional on the energy efficiency of the property. However the government intends to extend the scope of the existing LESA to include:

• the expansion of LESA to corporate landlords

• an extension of the scheme from 2009 to 2015

• the application of the allowance per property rather than per building

• ensuring that even smaller properties have access to the full allowance 

• the addition of the acquisition and installation of floor insulation as qualifying investment.

Landfill tax

The standard rate of landfill tax will be increased from £21 per tonne to £24 per tonne from 1 April 2007. The lower rate of tax will remain unchanged at £2 per tonne. The government will also consider the case for steeper increases from 2008.

Road fuel

From 7 December 2006 the effective excise duty rates for road fuels will be increased by 1.25 pence per litre.

Householders who generate their own power

Legislation will be introduced to put beyond doubt that where private householders install microgeneration technology in their home to generate power for their personal use, any payments they receive from the sale of surplus power to an energy company is not subject to income tax.

Tackling climate change

The Pre-Budget Report sets out several elements in the government’s strategy for tackling climate change both domestically and globally, including:

• promoting the development of a global carbon market

• taking further steps towards realising carbon capture and storage technology

• a package of measures to encourage the development of the biofuels market and innovative types of biofuel

• an ambition for all new homes to be zero-carbon within a decade, with a time-limited stamp duty exemption for most new zero-carbon homes.
  

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