Budget 2021 includes a series of measures intended to lay the foundations for a greener economy. From how we heat our homes, to the cars we drive and the products we buy, the Budget includes announcements laying the path for a “green industrial revolution”.
- Boosting cash for the national infrastructure bank, some of which will be invested in low-carbon projects, and a government-backed green savings bond for retail investors.
- New port infrastructure to support the next generation of offshore wind projects such as £20m to fund a UK-wide competition to develop floating offshore wind demonstrators, and £4m of funding for a biomass feedstocks programme.
- Introduction of a new Plastic Packaging Tax from 1 April 2022 that will apply to plastic packaging manufactured in, or imported into the UK, that does not contain at least 30% recycled plastic from 1 April 2022.
- Increases to the standard and lower rates of Landfill Tax.
- Increases to the van benefit charge and the car and van fuel benefit charges from 6 April 2021, while reducing the van benefit charge to zero for vans that produce zero carbon emissions
- Increases to Air Passenger Duty rates - the rates for long-haul economy flights from Great Britain will increase by £2, and the rates for those travelling in premium economy, business and first class will increase by £5. Campaigners who had been arguing for a reduction in APD on domestic flights out of Northern Ireland and will be disappointed this has not been acted upon.
- Changes to the Climate Change Levy (CCL) main and reduced rates to ensure qualifying businesses in the Climate Change Agreement scheme do not pay more in CCL than they would have if the rates were increased in line with RPI.
- Freezing of the Aggregates Levy rate for 2021/22 and maintaining the freeze on Carbon Price Support rates at £18 per tonne of carbon dioxide in 2022/23.
While many of these initiatives are a first step in the UK’s Green Agenda, as a collective, they highlight how climate change will increasingly influence tax and budgetary policy. There is a wide expectation that carbon and climate objectives will feature significantly in future UK budgets – we expect that the measures announced in Budget 2021 are merely the beginnings.
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If you have any queries on the topics covered above, please contact David Nelson, partner, KPMG in Belfast.