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BUDGET 2018: Duty on fuel and booze frozen but bad news for smokers

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Written by: Paloma Kubiak
29/10/2018
The Chancellor today confirmed fuel duty would be frozen for the ninth year in a row. He also announced no change to the cost of a pint, but a tax increase on cigarettes.

Philip Hammond has re-affirmed the government’s earlier pledge not to raise fuel duty, meaning drivers would continue to pay tax of 57.95p per litre for both petrol and diesel.

During the Budget 2018 speech, Hammond said since the fuel duty freeze came into effect in 2010, the move has saved the average car driver £1,000, while van drivers have seen savings of £2,500.

This comes at a cost of £840m to the Exchequer in the 2019/20 tax year.

Duty on alcohol

‘Spreadsheet Phil’ confirmed there will also be a freeze on duty levied on spirits, beers and most ciders in 2019, at a cost of £35m for the government’s coffers.

The cost of a pint of beer will be 2p lower than if duty had risen by inflation.

But duty on most wine and higher strength sparkling cider will rise by RPI inflation from 1 February 2019.

Tobacco duty

Hammond announced that the tobacco duty escalator would remain, meaning the price of tobacco will rise by two percentage points above RPI until the end of this Parliament. Hand rolling tobacco will increase by an additional one percentage point. The changes come into effect at 6pm tonight.

This will bring in £5m to the government’s books in the 2019/20 tax year.

The government will also legislate in the Finance Bill 2018/19 for a new duty rate for tobacco for heating (e-cigarettes). This will be set at the same level as hand rolling tobacco and take effect on 1 July 2019.

Air Passenger Duty

It’s good news for short-haul flyers as the Chancellor confirmed air passenger duty (APD) rates for 2020/21 will not rise, meaning the rates have stayed the same since 2012. This is £13 (reduced rate or economy), £26 (standard rate or premium) and £78 (higher rate or private jet).

However, long haul rates will rise by £2, and the rates for those travelling in premium economy, business and first class will increase by £4. Those travelling long-haul by private jet will see the rate increase by £13.

These are the new rates:

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