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Government proposes drastic reforms for energy efficiency rules

HM Treasury and DECC have published a consultation on reforming the business energy efficiency tax regime, including the CRC Energy Efficiency Scheme and the Climate Change Levy (CCL).

The reforms aim to streamline energy efficiency rules by rationalising the current regime of overlapping taxes and reporting requirements, avoiding the current complexity and some businesses being subjected to multiple obligations. 

According to the government, the proposed changes should deliver a simpler and more stable environment for business, reduce administrative costs and improve incentives to invest in energy efficiency.

Key proposals include:

  • to develop a single reporting framework based on the Energy Savings Opportunity Scheme, which seeks to incorporate the most effective elements from the range of reporting schemes and reduce compliance costs; and
  • to move towards a single tax by abolishing the CRC and moving the revenue raising element into a single business energy consumption tax based on the CCL. 

The consultation also seeks views on climate change agreements and new tax discount schemes, and on incentivising energy efficiency measures.

The publication of the consultation follows the announcement of a review of the business energy efficiency tax regime in the summer budget. Exchequer Secretary to the Treasury, Damian Hinds, states that the consultation is in response to "concerns from businesses and environmental groups around the complexity of the current energy efficiency landscape and the impact it has on administrative burdens". 

Responses are sought by 9 November 2015. The government states that it is likely to publish its response in the 2016 budget.

Contributor: Claire Welch

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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