The Government confirmed the announcements it made in July immediately following the election.  

With effect from 1 November 2024, Energy Profits Levy (EPL) will increase to 38%, and it will be extended to 31 March 2030.  The 29% investment allowance will be removed, and the decarbonisation allowance will be reduced to 66%.

To provide future certainty, a consultation will follow in early 2025 on how the Government will respond to future price shocks once EPL has ended.

To support the development of the Carbon Capture Usage and Storage (CCUS) industry, the Government has also proposed measures today which will remove the tax barrier to the transfer of suitable oil and gas assets to CCUS. Under the new measures, which will take effect on or after the date of Royal Assent of Finance Bill 2024-25, tax relief will be allowed for payments into decommissioning funds when the payment is associated with the transfer of an asset from an oil and gas company to a CCUS company.  Payments received by the oil and gas company from the CCUS company for the transferred assets will also be exempt from EPL.

Air Passenger Duty (APD) rates will increase on 1 April 2025 and 1 April 2026 as part of the Finance Bill 2024-25. Starting 1 April 2025, the reduced rate for domestic flights will be £7, with standard and higher rates at £14 and £84, respectively. For distances up to 2,000 miles, the rates will be £13 for the reduced rate, £28 for the standard rate, and £84 for the higher rate. This translates to an increase of £1 for those taking domestic flights in economy class, £2 more for those flying to short-haul destinations in economy class, £12 for long-haul destinations, and relatively more for premium economy and business class passengers.

From 1 April 2026, the domestic reduced rate will rise to £8, the standard rate to £16, and the higher rate to £142 and for distances up to 2,000 miles the rates will be £15 reduced rate, £32 standard rate and £142 higher rate.

The Government is consulting on significant changes for private jets. Under the proposals, the higher rate of APD, which currently applies only to larger, more luxurious jets, will be extended to all private jets over 5.7 tonnes, including business jets. This would significantly increase the APD costs of taking a private jet, which is normally taxed at the reduced or standard rate where the jet weighs less than 20 tonnes. Businesses or individuals affected by the proposed changes have until 22 January 2025 to respond to the consultation.

In March 2024 the Government consulted on the introduction of a UK Carbon Border Adjustment Mechanism (CBAM) as a new tax on the embedded carbon for imports of affected goods in the aluminium, cement, fertiliser, hydrogen, and iron and steel sectors with effect from 1 January 2027.

The purpose of the CBAM is to ensure that carbon intensive goods that face international competition are subject to the same carbon costs whether they are produced in the UK or abroad.  This is a critical measure which is needed to support decarbonisation measures and prevent the carbon leakage which occurs when production is moved to territories with lower regulation and lower carbon prices with cheaper, higher emission, production facilities.

In the response to consultation published today the Government confirmed that the tax will be introduced from 1 January 2027, but that the ceramics and glass sector which had been included in the original consultation will not be in scope from 2027 but will be considered for future inclusion.

In the original consultation a registration threshold of £10,000 value of imports of CBAM goods was proposed. The purpose of the threshold was for administrative simplicity, to eliminate taxpayers with low levels of imports from having to register and comply. In the response published today the registration threshold has been significantly increased to £50,000 which will significantly reduce the number of businesses which are affected, reducing the compliance burden faced.  The Government estimates that this threshold will maintain coverage of 99% of the imported emissions but remove 80% of the businesses that would have been brought into scope without the threshold due to low levels of imports of affected goods.

Further consultation and engagement with stakeholders will continue as the detailed proposals and draft legislation are developed. Affected businesses should continue to monitor developments and engage in the consultation processes that follow.

The Government has announced an increase to the Soft Drinks Industry Levy (SDIL) to address obesity and maintain incentives for manufacturers to reduce sugar content in their beverages.

The SDIL will be increased to reflect the 27% increase in the Consumer Price Index (CPI) between 2018 and 2024. The tax base will be moved from pence per litre to £ per 10 litres to allow smaller increments to be made to the rate changes.

The current SDIL rates of 18p per litre standard rate and 24p per litre higher rate will become £1.94 per 10 litres and £2.59 per 10 litres respectively with effect from 1 April 2025.

Over the following 4 years there will be an annual increase of CPI plus 10p or 13p per 10 litres to the standard and higher rates respectively. 
The Government also plans to review current sugar content thresholds and the exemption for milk-based and milk substitute drinks, ensuring the levy remains effective in promoting healthier choices.

The Government is looking to engage with industry and affected stakeholders to inform the review.  Businesses affected by any potential changes who want to engage with the process can contact the team at sdil_review@hmtreasury.gov.uk.

As normal, plastic packaging tax is set to increase by RPI to £223.69 per tonne with effect from 1 April 2025.

Chemically recycled plastic is permitted to count as recycled content for plastic packaging tax, but practical issues arise due to the nature of the recycling processes and being able to prove the recycled content that is produced and used.  This has acted as a barrier to chemically recycled content being counted for plastic packaging tax purposes.

In July 2023 the Government launched a consultation on the use of a mass balance approach to allow recycled plastic produced by chemical recycling to be used to account for and verify recycled content for plastic packaging tax.

In the response to consultation today the Government confirmed that it would pursue the introduction of a mass balance approach, and that it would need to consult further with stakeholders to develop the detailed policy and will publish draft legislation after that consultation exercise.

This is a positive move in aligning plastic packaging tax with the environmental objectives it set out to achieve, with the aim of increasing the amount of recycled content that is used.  Chemical recycling is an important part of the development of the circular economy to tackle difficult to recycle materials and produce high quality recycled material which can be used to package goods in regulated sectors, such as food and drink.  When introduced these changes will allow businesses using chemically recycled content to prove the recycled content of their packaging for tax purposes and claim the relief they are entitled to.

As announced in the Spring Budget 2024, the RPI increase for Landfill Tax will be higher than normal due to an adjustment for increased rates of inflation. From 1 April 2025, the standard rate will increase from £103.70 to £126.15 per tonne, while the lower rate will increase from £3.30 to £4.05 per tonne.

This 21.6% increase in landfill tax costs will significantly increase waste disposal costs faced by businesses and public sector organisations such as local authorities, schools and the NHS as the tax serves as an economic signal in the waste supply chain and influences the price of alternative disposal methods such as recycling, composting and energy from waste as well as the cost of disposal to landfill.

In a step that will be welcomed by many legitimate businesses in the waste management, animal welfare and transport sectors, the Government has launched a consultation today which attempts to tackle the hidden economy and reduce tax evasion in these sectors.

The term ‘tax conditionality’ seems confusing, but in practice all it means is the introduction of tax checks to be undertaken by the regulator when a business either first applies for a licence or renews their licence.

Whilst the proposals would introduce some additional administration for business, the benefits can be significant in reducing tax evasion, identifying businesses operating in the hidden economy and levelling the playing field so that legitimate businesses are not undercut by those that are evading tax.

The consultation, which closes on 31 January 2025, seeks input from stakeholders, including licence applicants, licensing bodies, and tax professionals, on the feasibility and impact of these measures.

The Government has extended the current 5p fuel duty cut and committed to freeze fuel duty rates for the 2025-26 fiscal year, costing it £3 billion in planned increases, and representing an estimated £59 saving for the average car driver.

To address concerns about retail prices of fuel and lack of competition, the Government is proposing to introduce a new ‘Fuel Finder’ scheme by the end of 2025, subject to parliamentary timings. This scheme will provide drivers with access to live, station-by-station fuel prices via their phones or satnavs, enhancing transparency and competition in the fuel market. The scheme will be supported by new compulsory open data requirements, ensuring that fuel retailers provide up-to-date pricing information. This data will be accessible through third-party apps, a dedicated fuel finder app, or a combination of both. A new statutory monitoring body, the Fuel Monitor, will also be created to oversee the market, ensuring ongoing scrutiny of fuel prices and margins to maintain competition and protect consumers.

The main rates of the Climate Change Levy (CCL) on electricity, gas, and solid fuels will increase in line with the Retail Price Index, effective from 1 April 2026. The new main rates will be £0.00801 per kWh for electricity and natural gas, and the LPG rate will remain frozen at £0.02175 per kg to ensure consistency with other portable fuels.

The Carbon Price Support rate freeze at £18 per tonne has been extended to 2026/27.

These announcements represent significant progress on several long-awaited initiatives. The Government has reaffirmed its commitment to achieving net zero and advancing the circular economy through the measures announced and consultations launched.

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