Budget 2015 – Environmental Issues

As usual the budget covered a range of issues including some environmental matters. The following is a round of some of the environmental aspects of the budget.

Landfill / Waste

  • The value of the Landfill Communities Fund (LCF) for 2015-16 will be set at £59.4 million, with the cap on contributions by landfill operators amended to 5.7%. The value of the LCF reflects devolution of landfill tax to Scotland from 1 April 2015 and the on-going high levels of unspent LCF funds. The saving from the LCF will be used to fund a one-off £4.2 million increase in Environment Agency funding to address waste crime.
  • The government is also consulting on a package of measures to reform the LCF, in order to accelerate the spending of funds on community projects, reduce administrative costs and simplify administrative processes .
  • As announced in the 2014 Autumn Statement, legislation will be introduced in the Finance Bill 2015 to introduce a loss on ignition (LOI) testing regime for fines (residual waste from waste processing) that qualify for a lower rate of landfill tax, from 1 April 2015 .
  • The standard and lower rates of landfill tax will increase in line with Retail Price Index (RPI) rounded up to the nearest 5 pence from April 2016.
  • The aggregates levy will remain at £2 per tonne in 2015-16.

Flood

  • As announced in the 2014 Autumn Statement, from 1 January 2015, business contributions (which include cash and services) to flood and coastal erosion risk management (FCERM) projects will be fully deductible for corporation tax and income tax purposes. However, the draft legislation, which was published on 10 December 2014, will be amended to expand the exceptions to a “disqualifying benefit”, the receipt of which will result in a deduction for the contribution being denied.
  • The government will bring forward some of the flood defence spending which it announced in December 2014. It has also added additional schemes to the list of those which will receive government funding (in whole or part). There is no increase in the overall budget of £2.3 billion. It is difficult to correlate the list of accelerated projects against the original December 2014 list. In many cases the government contribution is less than the full project cost, which suggests that the project can only progress if top up finance is available from other sources (perhaps the local authority, industry or private homeowners). Buyers or prospective tenants of properties in the areas which will be protected by these projects may be reassured that the intention is to reduce their flood risk more quickly but should make further enquiries to identify the precise timetable.

Energy

  • The climate change levy (CCL) main rates will increase in line with RPI from 1 April 2016.
  • The government has confirmed that the carbon price support (CPS) rates from 2016-17 to 2019-20 will remain capped at £18/tCO2.
  • As confirmed in the 2014 Autumn Statement, from 1 April 2015, the government will exclude from the CPS rates fossil fuels that are used by combined heat and power (CHP) plants to generate good quality electricity that is self-supplied or supplied under exemption from the requirement to hold a supplier licence.
  • The government announced, in the 2014 Budget, a package of reforms to reduce the energy costs faced by the most energy intensive industries (EIIs) to ensure that they are as competitive as possible. This included compensation for the indirect costs of feed-in tariffs (FITs) and the Renewables Obligation (RO) for 2016-17.
  • The government has said in the March 2015 Budget that it will bring forward the FITs component of the compensation to the earliest point at which state aid approval is received in 2015-16.
  • As announced in the 2014 Autumn Statement, companies benefiting substantially from subsidies for the generation of renewable energy will be excluded from also benefiting from the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts (VCTs) with effect from 6 April 2015. This is with the exception of community energy generation undertaken by qualifying organisations, which will in future become eligible for the Social Investment Tax Relief (SITR).
  • The government will provide a transition period of six months following state aid clearance for the expansion of SITR before eligibility for EIS, SEIS and VCT is withdrawn.
  • The Landlord’s Energy Saving Allowance (LESA) will no longer be available from:
    • 31 March 2015 for corporate landlords.
    • 5 April 2015 for unincorporated landlords of let residential properties.