The Chancellor has delivered the Government’s Budget for this year and the ongoing impact of COVID-19 was very much at the forefront. While there were announcements surrounding funding for green innovation projects and the establishment of measures to encourage innovation, there were no major announcements around energy policy, instead smaller snippets of support for the sector.
Liquid Gas UK members will be pleased to hear that fuel duty has been frozen for an 11th consecutive year, as well as the support which has been laid out for business investment in plant and machinery, which may help facilitate oil or red diesel users to move onto new, efficient LPG powered systems and equipment.
Members will also be intrigued by the new funding available for a green energy crops competition. We have already called on UK Government to ensure that feedstocks for a bioLPG supply chain in the UK are considered as part of this.
Finally, we welcome the end of the red diesel rebate for large sectors of the economy from April next year, however lower carbon, practical solutions like LPG must be supported to displace diesel usage. There also needs to be a clear pathway for sectors exempt, so that it encourages them to move to cleaner solutions and allow supply chains to develop, otherwise UK Government will not achieve carbon reduction it needs in the years to come.
Summary of announcements
- £4 million UK-wide competition for the first phase of a biomass feedstocks programme, to support the rural economy in making improvements to the production of green energy crops and forestry products;
- The Government confirms the end of the red diesel rebate for large sectors of the economy from April next year. No further changes were made to the tax treatment of other rebated fuels, but the Treasury will keep this under consideration.
- A public private UK Infrastructure Bank to help deliver the UK’s commitment to reach “net zero carbon” by 2050 and provide funding for projects across the UK;
- £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies such as those working in life sciences, quantum computing, or clean tech;
- £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators
- £68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes;
- £4.8 million for a hydrogen hub in Holyhead, Wales to pilot the creation of hydrogen using renewable energy and its use as a zero emission fuel for Heavy Goods Vehicles;
- Plans for at least £15 billion of green gilt issuance in the coming financial year, to help finance critical projects to tackle climate change.
- Support for business investment through a 130% upfront capital allowances super-deduction for investment in plant and machinery;
- The UK’s corporation tax rate from April 2023, will be 25% for profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate;
- From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses;
- Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee – temporary during COVID-19;
- Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced;
- The government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021;
- To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years. This will be available for both incorporated and unincorporated businesses.