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.
The Finance Act 2019 reflects the 2018 budget and concerns a number of environmental taxes, including:
Landfill tax rates for disposals in England and Northern Ireland from 1 April 2019 will be as follows:
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:
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 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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