Proposals to abolish the carbon reduction commitment (CRC) energy efficiency scheme and replace other energy tax policies with a single tax and reporting regime have been published by the Treasury.
A consultation on the plans was launched yesterday by the Treasury, the HMRC, the business department (BIS) and Decc. It follows chancellor George Osborne's announcement in the July budget to review and simplify the UK business energy-efficiency tax landscape.
The consultation proposes creating a system where a business or organisation is subject to just one tax and one reporting scheme by replacing the CRC and climate change levy (CCL) with a new energy-consumption tax based on the CCL.
The current energy efficiency tax system has been widely criticised for its complexity and for diverting resources away from delivering energy efficiency improvements. A recent survey by the CBI concluded: "Businesses hold a dim view of government policy, with only 5% of respondents considering the current framework to effectively encourage energy efficiency."
Richard Griffiths, senior policy advisor at the UK Green Building Council (UK-GBC) said that rationalising the tax regime could kick-start commercial retrofit activity. "Moving to a position where organisations are faced with just one key reporting scheme should help to free up organisations' resources and allow them to focus on delivering energy savings, rather than administration," he said.
The government is considering ways to incentivise energy efficiency, according to the consultation. Incentives could include tax relief in return for business investments in energy saving measures; government match-funding investments in energy efficiency and low carbon measures; or creating a link to audits such as ESOS whereby businesses could claim an incentive to cover the cost of implementing actions highlighted by audit reports. Manufacturing trade body the EEF called for tax incentives for energy efficiency in a report earlier this month.
The consultation closes on 9 November. The government says it will publish its final plans with the 2016 budget.
