British retailers need more clarity on energy efficiency tax landscape

Our new Energy Matters report reveals that while British businesses welcome Government plans to streamline the energy efficiency tax landscape, many are not aware of the upcoming consultation on the implementation of this legislation.

Energy Matters aims to demystify new and proposed pieces of legislation to explain their impact on the bottom line of UK businesses. For this issue, we are focusing on the government’s Energy Efficiency Taxation review which proposed moving from the current overly complex tax and reporting landscape to a single tax based on the Climate Change Levy.

As part of George Osborne’s review of the business energy efficiency tax landscape in July 2015 and the resulting consultation with industry, the government has confirmed a series of financial measures, including the ending of the CRC Energy Efficiency Scheme and planned increases to the Climate Change Levy (CCL - which is applied to the supply of energy to non-domestic customers).

We surveyed 100 retail decision makers about the review and there seems to be clear support for the streamlining of the energy efficiency landscape with 66% of those surveyed agreeing that the move to single energy efficiency tax and new reporting scheme will incentivise investment in energy efficiency.

The feedback however is that there is more to be done, as 39% of respondents were not aware that further consultation is due to take place this summer, and 39% who are aware do not intend to participate in the consultation. In addition, an overwhelming majority (97%) still feel more needs to be done to reduce red tape for business.

David Reed, Head of npower Business Solutions, said:

“We welcome the energy efficiency taxation review. The current regime of taxation and reporting requirements have become unwieldy and in some aspects counterproductive. This is a unique opportunity to right some wrongs.

He added:

“We wouldn’t want to see companies unduly penalised for not receiving the help they need to better manage their energy use. Transparent communication is vital here: clear energy reduction targets are important and we are supporting the requirement to make energy efficiency the starting point for regulatory reporting. But changes to the CCL’s rates will negatively impact business if firms aren’t fully aware that they need to prioritise energy efficiency.

He concluded:

“Over the next few years we’ll hopefully see the government move to a more uncluttered regulatory landscape, fit for a low carbon economy. However, the journey will be far less painful if we improve UK plc’s record on energy efficiency in advance.”