VAT thresholds

The VAT registration limits increase with effect from 1 April 2005 as follows: * the threshold for compulsory registration is £60,000.

* the threshold for voluntary deregistration is £58,000.


Avoidance scheme disclosure rules

New rules are to be introduced requiring businesses to disclose when they use or are party to schemes that give a tax advantage that does not appear on their VAT returns, eg in relation to VAT that cannot be deducted because it relates to exempt supplies or non-business activities.


Other VAT measures

* Changes to the partial exemption scheme rules which will affect those businesses using a special method'. In addition the benefit of rounding up in the standard method for large businesses whose residual input tax is more than £400,000 per month is removed.

* Local authority provision of certain services, such as childcare and welfare, will be reclassified as non-business rather than an exempt activity for VAT purposes from 1 April 2005. This will remove the restriction on VAT refunds.

* An extension to the list of energy saving materials qualifying for the 5% reduced rate on installation.

* Extending the unjust enrichment' provisions so that no business can unfairly benefit from charging too much VAT.

* Consultation on the introduction of a 5% reduced rate of VAT, for welfare charities and state regulated' welfare providers, on certain services in connection with the welfare of the elderly, disabled or children.

* The government is seeking to agree a 5% rate on the VAT costs incurred by charities in the construction, renovation and maintenance of memorials. In the meantime an interim grant scheme will be introduced.

* The extension of the listed places of worship scheme for three years until 2007/08 unless a permanent reduced rate is achieved earlier.

* Proposals to reform the VAT fuel scale charge to a CO2 emissions basis.


Vehicle Excise Duty (VED)

VED is frozen for the four least polluting CO2 bands and increased by the standard £5 for the two most polluting bands, as well as for cars and light goods vehicles of over 1549cc registered before 1 March 2001. Changes take effect for licences commencing on or after 1 April 2005.


Fuel duty

Excise duty rates on main road fuels will be increased by 1.22 pence per litre in line with inflation from 1 September 2005.


Landfill tax

The standard rate of landfill tax has been increased to £18 per tonne from 1 April 2005. The lower rate for inactive waste remains at £2 per tonne.