UK Budget 2020 – energy and environmental measures

Mar 23, 2020

Not surprisingly, the Budget confirmed that the plastic packaging tax will commence, as previously announced.

This tax will apply from April 2022 and is designed to incentivise the use of recycled plastic in packaging. The Budget sets the rate at £200 per tonne of plastic packaging that contains less than 30 per cent recycled plastic. This will apply to the production and importation of plastic packaging.

The Government has stated that it will keep the level of the rate and threshold under review to ensure that the tax remains effective in increasing the use of recycled plastic. It also intends to extend the scope of the tax to the importation of filled plastic packaging and apply a minimum threshold of 10 tonnes of plastic packaging to ensure the smallest businesses are not disproportionately impacted. A further consultation on the detailed design and implementation of the tax, which includes consideration of an exemption for certain types of medical packaging, will also be launched.

In addition, the following measures were also announced:-

  • The Government will freeze the aggregates levy rate in 2020‑21 and will be publishing a summary of responses and Government next steps to last year’s review of the levy;
  • The climate change levy (“CCL”) is being increased to £0.00568/kWh in 2022-23 and to £0.00672/kWh in 2023-24 for the rate on gas - the rates on electricity are frozen;
  • To support energy-intensive businesses to operate in a more environmentally sustainable way, the Government will reopen and extend the climate change agreement scheme by two years. This scheme allows businesses to reduce their CCL bill in exchange for meeting targets to improve their energy efficiency. The terms of the extended scheme will be set out in a consultation to be launched shortly. As part of this, the Government will simultaneously consult on long-term options for the scheme; and
  • The rate of the carbon price support is being frozen at £18t/CO2e in 2021-22.