Spring Statement Briefing – 23rd March 2022

Posted on 23rd March 2022

The Chancellor has delivered the Spring Statement 2022; please find below details of those policies that may affect our clients:

Policy Overview

The Chancellor delivered a Spring Statement today that puts billions of pounds back into the pockets of hard-working people – unveiling a new Tax Plan to ease the rising cost of living and to deliver the biggest cut to personal taxes in a quarter of a century:

Fuel duty for petrol and diesel will be cut by 5p per litre from 6pm 23^rd March 2022.
Reduction in VAT on energy saving materials such as solar panels, heating pumps and roof insulation from 5% to zero for five years.
There will be no business rates due on a range of green technology used to decarbonise buildings, including solar panels and batteries.
Eligible heat networks will also receive 100% relief.

Fuel Duty

The government will cut the duty on petrol and diesel by 5p per litre for 12 months. This will take effect from 6pm on 23^rd March 2022 on a UK-wide basis. Where practical, a proportionate cut will also apply to fuel duty rates which are lower than the main rates for petrol and diesel, including red diesel.

Reduction in VAT on Energy Saving Materials (ESM)

The government will reverse the ruling that restricted the application of VAT relief on the installation of ESMs. This will mean wind and water turbines will be added to the list of ESMs and the complex eligibility conditions will be removed. The government will also increase the relief further by introducing a time-limited zero rate for the installation of ESMs. The changes will take effect from April 2022. The Northern Ireland Executive will receive a Barnett share of the value of this relief until it can be introduced UK-wide.

Exemption on Business Rates for Green Technology

Making green technology, including solar panels and heat pumps, exempt from business rates from April 2022 will save businesses an extra £35 million in 2022-23, and is expected to be worth around £170m over the next five years to support the decarbonisation of buildings. A 100% relief for eligible low-carbon heat networks which have their own rates bill will also be available.

This is on top of reducing the VAT on energy savings materials (ESM) from 5% to 0%, further incentivising homeowners to buy ESMs from businesses as part of a wider package of Government measures targeted at improving energy efficiency.

Decarbonisation of Non-Domestic Buildings

To support the decarbonisation of non-domestic buildings, the government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks.

Green Reliefs for Business Rates

At Autumn Budget 2021 the government announced the introduction of targeted business rate exemptions from 1^st April 2023 until 31^st March 2035 for eligible plant and machinery used in onsite renewable energy generation and storage.