A number of tax and duty changes have recently been published by HMRC, affecting sectors including aviation, alcohol production, soft drinks, transport, waste, drinks packaging and charities.
Below is a summary of the key points and what affected businesses should start thinking about.
Air Passenger Duty and private jets
From April 2027, the higher rate of Air Passenger Duty will apply to aircraft weighing 5.7 tonnes or more where they are used as private or business jets. The current threshold is much narrower, applying to aircraft of 20 tonnes or more that are equipped to carry fewer than 19 passengers. The change means more private and business jet flights are likely to fall within the higher APD rate.
Alcohol Duty penalties
Alcohol Duty is moving to HMRC’s reformed penalty system for late filing and late payment. Late filing will use a points-based approach, with penalties applying once a business reaches its points threshold. Late payment penalties will be based on how much duty remains unpaid and how long it remains outstanding. Alcohol producers, importers and suppliers should review their filing and payment processes to reduce the risk of penalties.
Soft Drinks Industry Levy
The Soft Drinks Industry Levy, often called the “sugar tax”, is being widened. From 1 January 2028, the lower sugar threshold will fall from 5g to 4.5g per 100ml. The exemption for milk-based and milk substitute drinks will also be removed where those drinks contain added sugar. For milk-based drinks, the levy will look at total sugars after allowing for sugars naturally present from lactose in milk or milk products.
Manufacturers and importers may need to review recipes, labelling, pricing and systems well ahead of the implementation date.
Electric Vehicle Excise Duty
From 1 April 2028, a new mileage-based Electric Vehicle Excise Duty will apply to electric, plug-in hybrid and hydrogen fuel cell cars. Battery electric vehicles and hydrogen fuel cell electric vehicles will be charged at 3p per mile, while plug-in hybrid electric vehicles will be charged at 1.5p per mile. The rates will then increase in line with CPI from 2029/30.
Drivers will need to provide DVLA with an odometer reading and an estimated mileage figure for the year ahead. Payment can be made upfront or spread across the year, with a year-end reconciliation based on actual mileage. The new charge will sit alongside existing Vehicle Excise Duty processes.
The measure is designed to help replace falling fuel duty receipts as more drivers switch to electric vehicles. However, it may increase the running costs of electric cars and could influence choices between fully electric vehicles and plug-in hybrids.
Landfill Tax and dredgings
From 1 April 2027, the Landfill Tax exemption for dredged material will be narrowed. The exemption will continue to apply to the dredged material itself, but not to materials added as stabilisers before landfill disposal, such as air pollution control residues.
This change is likely to affect landfill site operators, ports, waterways, harbours and businesses producing stabilising materials. Affected organisations should consider whether current processes, contracts and costings need to be updated.
VAT and Deposit Return Schemes
New VAT accounting rules are being introduced for drinks Deposit Return Schemes, which are expected to launch across the UK in autumn 2027. Under the revised approach, the statutory scheme administrator will be responsible for accounting for VAT on deposits that are not refunded, rather than manufacturers or importers accounting for this across the supply chain.
This should simplify VAT accounting for businesses selling drinks covered by the schemes, but businesses will still need to prepare their systems for deposit handling, pricing and reporting.
VED exemption for search and rescue vehicles
From 1 April 2027, eligible search and rescue vehicles operated by charities will be exempt from Vehicle Excise Duty. To qualify, a vehicle must be mainly used for search and rescue activities, clearly marked “Search and Rescue” on both sides, and registered to a search and rescue charity.
This will be welcome news for registered search and rescue charities, helping to reduce running costs for vehicles used in their essential work.
What should businesses do now?
Although several of these changes do not take effect until 2027 or 2028, businesses should start reviewing whether they are affected and what practical changes may be needed. This could include updating systems, reviewing contracts, checking reporting obligations, modelling additional costs and considering whether technical consultation responses are needed.
If you have any questions about these changes, or are concerned about how they may affect your business, please get in touch with our team. We can help you understand the impact and plan ahead with confidence.
