The 2021 Spring Budget missed an opportunity to develop tax policy to set the UK on the road towards its 2050 net-zero emissions target, says law firm Pinsent Masons. Although the Budget confirmed the Government’s intention to issue the first ‘green gilt’ in summer 2021, the introduction of a carbon markets working group, and a number of proposed investments to encourage development of low-carbon technologies, key ‘green taxes’ were frozen. Fuel duty, aggregates levy, short-haul air passenger duty, and carbon price support will remain at current levels for 2021–22.
Jason Collins, partner at Pinsent Masons, said: ‘The Budget lacks any substantive measures on tax policy to support the journey to net zero. Tax policy needs a wholesale change to help achieve net-zero. For example, the companies paying the increased corporation tax rate might be amongst the heaviest polluters or the least – the system isn’t set up to care. And the super-deduction for expenditure on plant & equipment is an opportunity missed – that could have been more generous and applied only to cleaner technologies.’
Collins points out that, while the UK emissions trading scheme is expected to bring in an additional £115m by 2025/26, the policy only covers up to 40% of emissions generated in the UK and none of those generated outside the UK, and ‘doesn’t do enough to speed the UK’s transition to a low-carbon economy’.
The 2021 Spring Budget missed an opportunity to develop tax policy to set the UK on the road towards its 2050 net-zero emissions target, says law firm Pinsent Masons. Although the Budget confirmed the Government’s intention to issue the first ‘green gilt’ in summer 2021, the introduction of a carbon markets working group, and a number of proposed investments to encourage development of low-carbon technologies, key ‘green taxes’ were frozen. Fuel duty, aggregates levy, short-haul air passenger duty, and carbon price support will remain at current levels for 2021–22.
Jason Collins, partner at Pinsent Masons, said: ‘The Budget lacks any substantive measures on tax policy to support the journey to net zero. Tax policy needs a wholesale change to help achieve net-zero. For example, the companies paying the increased corporation tax rate might be amongst the heaviest polluters or the least – the system isn’t set up to care. And the super-deduction for expenditure on plant & equipment is an opportunity missed – that could have been more generous and applied only to cleaner technologies.’
Collins points out that, while the UK emissions trading scheme is expected to bring in an additional £115m by 2025/26, the policy only covers up to 40% of emissions generated in the UK and none of those generated outside the UK, and ‘doesn’t do enough to speed the UK’s transition to a low-carbon economy’.
