2007 BUDGET SUMMARY

• Personal tax

• Corporate & Business Tax

• Employment issues

• Capital taxes

• VAT

• Environmental Measures

• Other Matters

Environmental Measures

Air Passenger Duty (APD)

In the Pre-Budget Report APD rates were increased from 1 February 2007. The new rates of duty are:

• 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.

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 at £2 per tonne.

Legislation will be included in the Finance Bill to further increase the standard rate from £24 to £32 per tonne and increase the lower rate from £2 to £2.50 per tonne. These increases will apply from 1 April 2008.

Comment
The government has announced its commitment to increase the standard rate of the landfill tax by £8 a tonne per year until at least 2010/11.

Aggregates Levy

Legislation will be included in the Finance Bill to increase the rate of Aggregates Levy from 1 April 2008. The current rate of £1.60 per tonne will rise to £1.95 per tonne.

Climate Change Levy

As announced in 2006 the rates will increase in line with inflation from 1 April 2007 and the Finance Bill will include further inflationary increases in the rates from 1 April 2008.

Road fuel

From 1 October 2007 the effective excise duty rates for road fuels will be increased by 2 pence per litre. Further announcements were made that the next two years’ increases will be 2 pence and 1.84 pence per litre.

The government has announced that the current 20 pence per litre duty differential on biofuels will be extended to 2009/10.

Vehicle Excise Duty (VED)

The government has announced the VED rates for this year and the following two years.
The major change will be increasing the rate for the most polluting band G cars to £300 in 2007/08 and to £400 in 2008/09. There will be a reduction in the rate of duty on band B cars to £35.

Microgeneration

Legislation will be introduced in the Finance Bill to clarify the tax treatment of private householders who have installed microgeneration technology in their homes primarily for the purpose of generating electricity for their personal use. The receipt of a Renewables Obligation Certificate (ROC) will not be subject to income tax and gains made on the disposal of a ROC will not be subject to capital gains tax.

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