Over the past 5 years the general UK population’s rise in concern and consciousness for the environment is undeniable. From youth climate change protests to the suggested conversion to veganism to help the environment; climate change activism can be seen in all walks of life in the UK.
This article will focus on how UK taxes are joining in on the effort to help the environment.
During 2014 Alone, UK environmental taxes raised £44.6billion; this equated to 7.5% of all revenue from taxes and social contributions in 2014. The main source of the sum was from the tax on Hydrocarbon oil (i.e. fuel tax), contributing 72.9% of all environmental taxes in 2014.
Another environmental tax is more directly on transport, for example Air Passenger Duty and Boat Licenses. This made up 23.7% of environmental tax revenue in 2014.
The final key category of environmental tax is pollution and resources taxes, such as Landfill tax, fishing licenses and aggregates levy.
The environmental taxes that have been purposed in the 2018 Budget include:
A new tax on the production and importation of plastic packaging will be introduced in 2022. This aims to provide a financial incentive to manufacturers to produce more sustainable packaging and would in turn help combat issues such as water and sea life pollution.
Carbon emissions tax
In FB 2018-19, the government will legislate a new carbon emissions tax to help meet the legally-binding carbon pricing commitment under the Climate Change act.
Company car tax and VED: carbon dioxide emission regime
The impact of the Worldwide harmonised Light-vehicles Test Procedure (WLTP) on the VED and company car tax systems is to be reviewed. Legislation will confirm that, for the purposes of VED and company car tax, the applicable CO2 figure for cars will be based upon WLTP. WLTP aims to provide a closer representation of ‘real-world’ fuel consumption and CO2 emissions.
For cars registered prior to 6 April 2020, HMRC will continue to use the current New European Driving Cycle (NEDC) test procedure for the purposes of collecting company car tax. Similarly, cars first registered prior to 1 April 2020 will maintain their current VED treatment.
Climate change levy rates
The rebalancing of the electricity and gas main rates of climate change levy (CCL) is to continue. The electricity rate will be lowered in 2020/21 and 2021/22, and the gas rate will increase in these years so that it reaches 60% of the electricity main rate by 2021/22. Other fuels such as coal will continue to align with the gas rate. The rate of CCL for liquefied petroleum gas will remain frozen at the 2019/20 level in both 2020/21 and 2021/22.
Carbon price support rates
The price of EU ETS allowances has risen significantly over recent months, raising the Total Carbon Price (currently made up of the EU ETS price and the carbon price support (CPS) rate). The CPS rate will be frozen at £18 per tonne of carbon dioxide emitted for 2020/21. From 2021/22, the government will seek to reduce the CPS rate if the Total Carbon Price remains high.
Aggregates levy rates
The Aggregates Levy rate for 2019 to 2020 will be frozen, but it is the intention to return the Levy to index-linking in future.
Landfill tax rates
The standard and lower rates of landfill tax will be increased in line with RPI, rounded to the nearest 5p, for both 2019/20 and 2020/21.