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AIA

Finance Bill 2012: Changes to fuel duty

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7th Dec 2011
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As revealed in the Autumn Statement last week the government has confirmed in the Finance Bill 2012 that the proposed 3.02ppl (pence per litre) increase in fuel duty, effective from 1 January 2012, will be deferred until 1 August 2012.

In addition, the further inflation increase that was planned for 1 August 2012, expected to be worth 1.92ppl, has been cancelled.

The Chancellor had been under increasing pressure to defer the increases due to high fuel bills which have added significantly to household and business costs.

The impact on businesses, compared to the policy announced at Budget 2011, means that an average haulier will be £300 better off in 2011-12 and £900 better off in 2012-13, giving a total of £1,200 better off over the two years.

AA president, Edmund King, said the Chancellor had seen sense on this vital issue. “Cash-strapped drivers will heave a heavy duty sigh of relief as current pump prices are close to the record high,” King said. “This measure will not only be a relief to drivers but also to the High Street as drivers have less to spend if more money is pumped into their tanks.”

It was also announced on Tuesday that individuals who, because of the nature of their employment, need a security enhanced company car will benefit from the abolition of an £80,000 cap on the cash equivalent of the benefit. The new measure will be introduced in amendments to ITEPA 2003 in the Finance Bill 2012.

From 1 August 2012, the duty rate for leaded petrol (and compressed natural gas) will change by the same monetary amount as main fuel duty.

The duty rate for aviation gasoline and rebated oils will also change in proportion to the main rate.

The duty differential for liquefied petroleum gas will be maintained until 1 August 2012 when it will be reduced by 1ppl.

In addition to changes to fuel duty, the government announced in the Budget 2011 that further changes would affect businesses and their employees who use a car for business. Perhaps most importantly the rates for travel by car, which have been unchanged for a decade, included in the Budget an increase in the main rate.

Duty rate per litre (£)

Type of fuel

Current

On and after 1 August 2011

Unleaded petrol

0.5795

0.6097

Heavy Oil

0.5795

0.6097

Biodiesel

0.5795

0.6097

Bioethanol

0.5795

0.6097

Light oil

0.6767

0.7069

Avgas

0.3770

0.3966

Light oil  (use as furnace fuel)

0.1070

0.1126

Marked gas oil

0.1114

0.1172

Fuel oil

0.1070

0.1126

Heavy oil

0.1070

0.1126

Kerosene

0.1114

0.1172

Biodiesel (non-road use)

0.1114

0.1172

Biodiesel (blended with gas oil)

0.1114

0.1172

Road fuel natural gas

0.2470 p/kg

0.2907 p/kg

Road fuel gas other than NG

0.3161 p/kg

0.3734 p/kg

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