Key takeaways from the autumn 2022 budget for businesses working towards net zero
- Thursday, November 17, 2022
- Posted By The Growth Company
The Chancellor, Jeremy Hunt, has announced his autumn budget on 17 November 2022 and revealed how the UK plans to navigate a tough economic period. In the middle of a rising cost of living crisis and recession, this budget has certainly been one to watch.
Having promised to create ‘stability, growth and public services’, what does the autumn budget mean for the environment and for businesses working hard to become net zero?
Jeremy Hunt emphasised that the government will not draw back from net zero commitments. He has shown the government’s commitment to tackling the 'existential' climate threat with the promise of new and accelerated renewable energy funding and energy efficiency funding, but reports show that green groups remain concerned.
Amy House Director of Green Economy (a Bee Net Zero partner) says, “The Chancellor is right to say that now is not the time to pull back from our net zero commitments, and it is encouraging to see a commitment to the acceleration of renewable energy.
Efficiency savings is once again the missing element here, reducing consumption at source within our businesses, across our transport networks and in our buildings presents a real opportunity to build energy security.
We cannot rely on our businesses’ altruism alone during a cost of living crisis, policy is needed to drive change that will deliver our net zero ambitions.”
We’re looking into some of the elements of the budget that will affect businesses trying to achieve net zero including energy prices and support for the transition to electric vehicles.
The government announced plans for a new long-term commitment to drive improvements in energy efficiency which will in turn bring down bills for households, businesses and the public sector.
Overall, the government revealed a new ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030 against 2021 levels.
New government funding worth £6 billion will be made available from 2025 to 2028, in addition to the £6.6 billion provided in this Parliament to achieve this target.
Also, a new Energy Efficiency Taskforce will be charged with delivering energy efficiency across the economy to ensure success.
A future review of the Energy Bill Relief Scheme will determine support available for non-domestic energy consumers, excluding public sector organisations after 31 March 2023.
The government has published terms of reference for the review, which will be published by 31 December 2022.
While the government recognises that some businesses may continue to require further support after March 2023, the overall scale of support the government can offer will be significantly lower and targeted at those most affected.
In terms of energy security, the UK government is determined to “stop ourselves being at the mercy of international gas prices” and hopes to counter this with a combination of energy independence and energy efficiency.
The government will continue to safeguard the UK’s energy security by delivering new nuclear power, including most notably to proceed with plans to build the Sizewell C nuclear plant in Suffolk. The plant is expected to provide up to 7% of the UK’s electricity needs, create 10,000 jobs, and provide power to 6 million homes for 50 years. However, critics of the plant have noted the large costs associated with it, as well as highlighting that it will not be generating electricity until the 2030s even if construction remains on schedule.
The government has also promised the roll-out of cheap, clean renewables, including wind and solar to provide further energy security. This will support the government’s commitment to reduce emissions, decarbonise the power system by 2035 and reach net zero by 2050.
The UK Infrastructure Bank is a British state-owned investment bank. It is intended to help with the UK Government's plan to reach net-zero carbon by 2050 and to support economic growth in regional and local sectors across the United Kingdom.
The government is placing the UK Infrastructure Bank on a statutory footing which means green investment will continue. This move will further cement the Bank’s status as a key institution in the UK’s net zero goals, enabling long-term investment in infrastructure to tackle climate change and support regional and local growth
Currently, electric vehicles do not have to pay any road tax. From April 2025, electric cars, vans, and motorcycles will begin to pay VED at the standard rate which currently applies to petrol and diesel vehicles. This will ensure that all road users begin to pay a fair tax contribution as the take up of electric vehicles continues to accelerate. The government will legislate for this measure in Autumn Finance Bill 2022.
This means:
• new zero-emission cars registered on or after 1 April 2025 will be liable to pay the lowest first-year rate of VED (which applies to vehicles with CO2 emissions 1 to 50g/km) currently £10 a year. From the second year of registration onwards, they will move to the standard rate, currently £165 a year
• zero-emission cars first registered between 1 April 2017 and 31 March 2025 will also pay the standard rate
• the Expensive Car Supplement exemption for electric vehicles is due to end in 2025. New zero-emission cars registered on or after 1 April 2025 will therefore be liable for the expensive car supplement. The Expensive Car Supplement currently applies to cars with a list price exceeding £40,000 for 5 years
• zero and low-emission cars first registered between 1 March 2001 and 30 March 2017 currently in Band A will move to the Band B rate, currently £20 a year
• zero-emission vans will move to the rate for petrol and diesel light goods vehicles, currently £290 a year for most vans
• zero-emission motorcycles and tricycles will move to the rate for the smallest engine size, currently £22 a year
• rates for Alternative Fuel Vehicles and hybrids will also be equalised
The government will legislate in Spring Finance Bill 2023 to extend the 100% First Year Allowance for electric vehicle charge points to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes. This will ensure that the tax system continues to incentivise business investment in charging infrastructure.
The government is setting rates for Company Car Tax until April 2028 which will provide long-term certainty for taxpayers and industry. Lower rates will continue to incentivise the take up of electric vehicles for many businesses.
Appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1% in 2025-26; a further 1% in 2026-27 and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars
Rates for all other vehicles bands will be increased by 1 percentage point for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28
For free and impartial advice on how this budget affects your business's net zero ambitions, get in touch with our team.