Duties
Vehicle
excise duty (VED) and road fuel duty
With effect from 23 March 2006
VED rates for cars with the very lowest carbon emissions (band A) will be
reduced to zero. VED rates will also be reduced for bands B and C by £35 and £5;
frozen for bands D and E; and increased by £25 for band F. A new higher band
(band G) will be introduced for the most polluting new vehicles (emissions above
225g/km and registered from 23 March 2006). The VED rates for cars and light
goods vehicles registered before March 2001 will be frozen in the lower band and
increased by £5 in the higher band. Road fuel duties will increase from 1
September 2006 by 1.25p per litre except for the duty on liquefied petroleum gas
which will increase by 2.25p per litre.
Other
duties or levies
From 6pm on 22 March 2006 tobacco
duty rates will rise in line with inflation and a similar rate of increase will
apply to duties on beer and wine, with effect from midnight on 26 March 2006.
There is no increase in duty on spirits, cider and sparkling wine.
The rates of Climate Change Levy
will remain unchanged for 2006/07 and will increase in line with inflation for
2007/08. The temporary 50% rate for 2006 for energy used in horticulture will be
abolished on and after 1 April 2006.
The excise definition of a gaming
machine is to be more closely aligned with the Gambling Act 2005 for any
licences commencing on or after 1 August 2006.
Stamp
taxes and duty
While the rates for stamp duty
land tax (SDLT) remain unchanged, the threshold for paying SDLT on residential
property is increased from £120,000 to £125,000 from 23 March 2006.
The current alternative finance
relief will be extended to all persons, allowing parity of SDLT treatment to
companies, clubs, trustees, etc. This measure has effect for all
alternative finance purchases on or after Royal Assent to Finance Bill 2006.
A series of SDLT measures is to
be introduced from Royal Assent to Finance Bill 2006 so as to simplify and
clarify the rules on the following:
- transfers of an interest in
a partnership
- 'successive linked leases'
- variations in rent
- rent reviews under agricultural
tenancies
- interim rents under business
tenancies
- 'backdated' leases
- notifying assignments of leases.
On or after 12 April 2006 certain
transactions will be taken out of the scope of SDLT.
These transactions are:
- a gift of property where the
donee or beneficiary pays the capital gains tax or inheritance tax arising
on the gift
- the payment of landlord’s
reasonable costs on the grant, variation or termination of a lease
- a covenant by an agricultural
tenant to assign entitlement to the Single Farm Payment to the landlord on
termination of the tenancy.
A SDLT charge will be introduced
on the transfer of property into a unit trust in consideration of the issue of
units. This charge will be by reference to the market value of the land
and buildings transferred and will have effect from 22 March 2006.
The relief from Stamp Duty for
certain company reconstructions and acquisitions that result in no overall
change of ownership will be extended so as to be available to acquiring
companies world-wide. The relief will also not now be denied where, for
practical reasons, there has had to be a slight change in the proportion of
shares held by each shareholder.
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