Spring Budget Briefing 2023 – 15th March 2023
The Chancellor has delivered the Spring Budget 2023; please find enclosed details of those policies that may affect our clients:
Budget Policy Overview
Supported by government decisions taken at Autumn Statement 2022, the economy and public finances have proved more resilient than expected in the Office for Budget Responsibility’s (OBR) November 2022 forecast. Spring Budget 2023 takes further action to deliver on three of the Prime Minister’s five priorities: halving inflation, growing the economy, and getting debt falling. The OBR’s latest forecast shows that inflation will more than halve this year, the economy is on track to avoid recession with gross domestic product (GDP) higher, and debt falling in the medium term.
While the UK economy’s performance has improved compared to the OBR’s November forecast, significant challenges remain.
The Spring Budget addresses these challenges. In the short term, the government is striking a balance between providing necessary help to households, businesses and the economy, and supporting the Bank of England to reduce inflation.
Energy and Environmental Taxes
Fuel Duty
The government is continuing to support households and businesses by maintaining the rates of fuel duty at the current levels for an additional 12 months through extending the temporary 5p fuel duty cut and cancelling the planned increase in line with inflation for 2023-2024.
Climate Change Levy
The main and reduced rates for 2022 and the rates for 2023 to 2024 are as follows:
Climate Change Levy Main Rates
| Taxable Commodity | Rate from 01/04/2022 | Rate from 01/04/2023 | Rate from 01/04/2024 |
| Electricity (£ per kWh) | 0.00775 | 0.00775 | 0.00775 |
| Natural gas (£ per kWh) | 0.00568 | 0.00672 | 0.00775 |
| LPG (£ per kg) | 0.02175 | 0.02175 | 0.02175 |
Energy Price Guarantee (EPG)
The government will maintain the EPG across the UK at £2,500 per year for the typical household for an additional three months (April to June 2023). The planned increase to £3,000 per year will therefore be implemented on 1st July 2023, rather than 1st April 2023 as previously announced.
Energy Bills Discount Scheme (EBDS)
The Energy Bills Discount Scheme will provide all eligible businesses and other non-domestic energy users across the UK with a discount on high energy bills until 31st March 2024, following the end of the current Energy Bill Relief Scheme. It will also provide businesses in sectors with particularly high levels of energy use and trade intensity with a higher level of support.
Swimming Pool Support Fund
The government will provide over £60 million of support for public swimming pools across England. This will be targeted to address the immediate cost pressures facing public swimming pool providers, as well as providing investment in energy efficiency measures to reform facilities, reduce future operating costs and deliver long-term sustainability.
Capital Allowances
From the 1st April 2023 until 31st March 2026 investments made by companies in qualifying plant and machinery will qualify for a 100% first-year allowance for main rate assets.
Electricity Generator Levy
As announced at Autumn Statement 2022, and following the publication of draft legislation on the 20th December 2022, the government will legislate for the Electricity Generator Levy. As previously announced, the final legislation will include indexation of the benchmark price; the recognition of a limited set of exceptional costs relating to the acquisition of generation fuel, which can be set against exceptional receipts; and rules for joint ventures.
VAT Relief for Energy Saving Materials
The government has published a call for evidence on options to reform the VAT relief for the installation of energy saving materials in the UK. The call for evidence will consider the inclusion of additional technologies and the possible extension of the relief to include buildings used solely for a relevant charitable purpose.
Climate Change Agreement Scheme
The government will extend the Climate Change Agreement scheme by two years and will open to new entrants and increase the buy-out price to £25/tCO2e. Participants that meet agreed energy efficiency targets will be entitled to reduced rates of Climate Change Levy in 2025-2026 and 2026-2027. The extension will be open to new participants in currently eligible sectors and will consult on the details of the extension and proposals for any potential future Climate Change Agreement Scheme.
Carbon Capture, Usage and Storage (CCUS)
The government will also provide up to £20 billion funding for early deployment of CCUS, to help meet the government’s climate commitments. A shortlist of projects for the first phase of CCS deployment will be announced later this month. Further capture projects will be able to enter a selection process for Track 1 expansion to be launched this year, and 2 additional clusters will be selected through a Track 2 process, with details announced shortly.
Control for Low Carbon Levies (CLCL)
The government will set out plans to refresh the existing CLCL. The CLCL was published in 2017, before the government’s commitments on Net Zero, and will be replaced by a new framework to reflect our energy security priorities. We will set out details later in the year.
