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Finance Act 2019

Synopsis

The Finance Act 2019 reflects the 2018 budget. Updated environmental tax policies concern; the rate of landfill tax, eligibility for climate change levy exemptions and rates of vehicle excise duty. The Act also includes powers to apply a carbon emissions tax in place of the EU Emissions Trading System after the UK leaves the EU.

 
 
 

Summary

The Finance Act 2019 reflects the 2018 budget and concerns a number of environmental taxes, including:

  • The rates of landfill tax in England and Northern Ireland;
  • The future of the climate change levy exemption for mineralogical and metallurgical processes;
  • An exemption from income tax and national insurance contributions for employees recharging electric and plug-in hybrid vehicles at or near their workplace;
  • First-year enhanced capital allowances on electrical vehicle charge points are extended until 31 March 2023 and 5 April 2023 for Corporation Tax and Income Tax purposes respectively;
  • Rates of vehicle excise duty (VED) for light vehicles, motorcycles and zero emissions taxis; and
  • Powers to apply a ‘carbon emissions tax’ in the place of the European Union Emissions Trading System (EU ETS) after the UK leaves the EU.

Landfill Tax

Landfill tax rates for disposals in England and Northern Ireland from 1 April 2019 will be as follows:

  • Non-inert (active) waste rate: £91.35 per tonne.
  • Inert waste rate: £2.90 per tonne.

These rates will also apply to disposals at unauthorised landfill sites, to support enforcement of this waste offence.

Climate Change Levy Exemptions

The Finance Act 2019 amends exemptions from the climate change levy for mineralogical processes.

Mineralogical processes eligible for the exemption are now defined as those within Division 23 of NACE revision 2: The manufacture of other non-metallic mineral products. This replaces references to EU legislation.

Division 23 includes the manufacture of:

  • glass products,
  • refractory products;
  • clay building materials;
  • porcelain and ceramic products;
  • cement, lime and plaster;
  • articles comprised of concrete, cement and plaster;
  • cutting, shaping and finishing of stone; and
  • manufacture of abrasive products and non-metallic mineral products.

Extension of the Change Levy Exemption to further supply arrangements

The Finance Act 2019 extends this exemption to energy supplied by a landlord, meaning that the landlord will be able to claim this exemption on behalf of their tenant(s).

Energy supplied in this manner was not previously eligible for the exemption.

Carbon Emissions Tax

Part 3 of the Finance Act 2019 enables the government to make legislation introducing a carbon emissions tax, which would be payable by stationary installations currently subject to the EU ETS. This tax would not cover UK aviation.

Installations within sectors subject to the EU ETS would require a permit under this scheme.

The powers provided by the Act enable action to be taken if the UK leaves the EU without an agreement.

Initially, the carbon emissions tax would be allocated annual emissions allowances in line with the existing EU ETS. Mirroring the EU ETS, organisations would be required to purchase additional UK allowances to cover any shortfall identified through monitoring, reporting and verification of emissions. Monitoring, reporting and verification of emissions would continue to be undertaken using the existing arrangements established for the EU ETS.

Rather than a trade-based system, additional allowances would be charged at a rate of £16 per tonne of carbon dioxide equivalent emissions (tCO2e).

Reporting Periods

Reporting periods under the scheme would run for 12 months, although the initial year would run between 1 April 2019 and 31 December 2019.

Following the submission of verified reports, installations subject to the scheme would be required to surrender an adequate number of allowances covering their ‘emissions determination’ for the period.

Future Trade-based System

The Finance Act 2019 also permits the Secretary of State to incur expenditure in preparing a proposed UK emissions reduction trading scheme, which would apply market-based charges for the allocation of emissions allowances if adopted.

 

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