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.
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