Value Added Tax and indirect taxes

Thresholds

The standard rate of VAT remains at 20%. For a table of the main tax rates and allowances for 2024/2025, see here.

The VAT registration threshold, which had previously been frozen on the basis of recommendations of the Office of Tax Simplification (OTS) concerning the distortions created by the high registration threshold in the UK, will be increased to £90,000 from April 2024. The deregistration threshold will also increase to £88,000.

VAT treatment of private hire vehicles

The 2023 Autumn Statement contained the announcement that the government will consult on the VAT treatment of private hire vehicles in early 2024. The decision follows the High Court ruling in Uber Britannia Ltd v Sefton MBC, where Uber successfully sought a declaration that all private hire operators in the UK should be subject to the same rules as Uber on classification of workers and status as principal. The has resulted in a requirement to charge VAT on such services not only for Uber but other operators in the same position.

The Spring Budget 2024 provided an update that the consultation will be published in April 2024.

Trades in Carbon Credits and the Terminal Markets Order

In July 2023, the government published a consultation on reforming the application of the Terminal Markets Order 1973 (TMO) so that it operates more flexibly in future. It did not involve significant changes to the scope of the TMO but rather updating the existing legislation to better reflect current practice and ensure that it can be kept up-to-date more easily in future.

The government has now announced that it introduce legislation in Spring Finance Bill 2024 to take forward these changes to the TMO which will take effect from the date of Royal Assent to Spring Finance Bill 2024. This will allow for further reform, including bringing trades in carbon credits within the scope of the TMO in due course.  A summary of responses to the consultation on reforming the TMO legislation will be published in due course.

VAT retail export scheme

The government has come under a lot of pressure to reconsider its decision not to introduce a form of VAT retail export scheme following Brexit. Whilst it has not yet bowed to that pressure, the Spring Budget 2024 notes that the OBR has now reviewed the original costing of the removal of tax-free shopping and says that the government will consider these findings alongside industry representations and broader data, and welcomes any further submissions in response to the OBR’s findings.

Vaping products duty

The Chancellor announced that the government will introduce legislation in a future Finance Bill to introduce a new duty on vaping products. A consultation on the detailed design and implementation of the duty has been published, which will close on 29 May 2024.

Registration for the duty will open on 1 April 2026 with the duty taking effect from 1 October 2026 alongside a proportionate increase in tobacco duties.

Landfill tax rates (LFT)

The Spring Budget 2024 announced that the government will increase the standard and lower rates of Landfill Tax in line with Retail Price Index (RPI), adjusted to take account for high inflation in the period 2022 to 2024 and rounded up to the nearest 5 pence.

The standard and lower rates of LFT will increase for taxable disposals that take place or which are treated as taking place on or after 1 April 2024 in line with RPI as follows:

• Standard rate: £103.70 per tonne (£126.15 from April 2025)
• Lower rate: £3.30 per tonne (£4.05 from April 2025).

Aggregates levy

The government will increase the Aggregates Levy in line with RPI. The rates from 1 April 2024 will be: £2.03 per tonne from April 2024 and £2.08 per tonne from April 2025.