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Finance Act 2014

Section 94: Aggregates Levy: Removal of Certain Exemptions


1.This section suspends the exemptions, exclusions and reliefs (‘exemptions’) from the aggregates levy which are subject to the European Commission’s State aid investigation, from 1 April 2014.

Details of the Section

2.Subsection (3) inserts a new sub-paragraph into section 17(3) of the Finance Act 2001 (‘the Act’) to provide that aggregate is exempt if it is made up entirely of the              by-products from either an industrial combustion process or the smelting or refining of metal.  It also repeals the exemptions where aggregate consists wholly of:

  • By-products (excluding the overburden) from the extraction or other separation from a quantity of aggregate of any china clay or ball clay; and

  • the spoil from a process by which coal, lignite, slate, shale or any of the substances listed in section 18(3) of the Act has been separated from other rock after having been extracted from that rock.

3.Subsection (4) amends section 17(4) of the Act to omit the exemption for coal, lignite, slate, shale, clay and to make a consequential amendment relating to the removal of the exemption for the by-products from an industrial combustion process and the smelting or refining of metal.

4.Subsection (6) amends section 18(1) of the Act to ensure substances listed in section 18(3) are brought into the definition of aggregate in Part 2 of the Act.

5.Subsection (7) adds two new exempt processes to section 18(2) of the Act relating to the production of clay or shale ceramic construction products and of gypsum or anhydrite plaster, plasterboard or related products.

6.Subsections (9) and (10) amend the definition of commercial exploitation in section 19 of the Act.  Subsection (10) adds two new sections 19(1A) and (1B).  The first defines what is meant by commercial exploitation and the second applies this definition to certain specified materials and processes being brought into tax by this section.  Subsection (9) disapplies the existing definition of commercial exploitation set out in section 19 of the Act to these materials.

7.Subsection (11) amends section 22 of the Act to ensure that anyone to whom the materials specified in section 19(1B) are or are to be supplied becomes responsible for their commercial exploitation where that person intended that they be used for construction purposes.

8.Subsection (12) sets out the commencement provisions for the section.

Background Note

9.Aggregates levy is a tax on the commercial exploitation of rock, sand and gravel in the UK.  It was introduced on 1 April 2002.

10.On 7 March 2012 the European General Court annulled a 2002 decision by the European Commission not to raise objections against the aggregates levy. As a result of that judgment, the Commission carried out a preliminary assessment of the levy in order to determine whether to raise objections against the tax on the grounds that it potentially gave rise to State aid. On 31 July 2013 the Commission notified its decision to open a formal State aid investigation which would examine whether certain exemptions from the levy are in line with the logic and nature of the tax.

11.As part of the formal investigation process, the government is providing information to the Commission to support its view that the exemptions are not State aid. However, while this process continues, the government is obliged to suspend the exemptions in question under Article 108(3) of the Treaty on the Functioning of the European Union.

12.Revenue & Customs Brief 31/13, published on 11 October 2013, invited anyone who wished to comment on the suspension before the publication of the draft legislation to register their interest. All those that registered an interest were sent questions with a deadline of 15 November 2013 for responses. Officials from HM Treasury and HM Revenue and Customs also held a number of meetings with interested businesses, their professional advisers and industry representative bodies. Legislation prepared to give effect to the suspension was then published in draft, for consultation, on 18 December 2013. The deadline for responses was 12 February 2014. This section takes account of the views received during the course of both exercises.

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