Good news for businesses and families on environmental taxes

By Jayne A Harrold, indirect tax senior manager
Lots of good news for businesses and families on the environmental tax front today as costs are reduced in a number of areas, but it remains to be seen what environmental impact these reductions may have.
Carbon price floor: CHPs excluded

The Chancellor confirmed, as expected, that combined heat and power plants will be excluded from the carbon price floor from 1 April 2015. This is good news for manufacturers, housing associations, hospitals, and others that operate combined heat and power plants. It will not only reduce the cost of operation of these plants which provide more efficient ways of generating electricity and heat/cooling, but also reduce the burden of compliance with complicated tax rules.
Fuel duty

Fuel duty was frozen once again, good news for families, businesses and transport companies.
Landfill tax

The introduction of the new landfill tax loss on ignition testing regime for fines from waste recycling facilities was also confirmed today, with a slight softening for a transitional period.
The new testing regime should provide more certainty for landfill site operators. The confirmation that the changes are definitely being introduced should allow landfill site operators and recycling operations to start preparing for the change.
The proposed 10% limit for the loss on ignition test has been softened, with a 15% limit applying for a 12 month transitional period until 2016. This should reduce the impact on recycling operations, which would be faced with a substantial increase in their operating costs if they could not meet the limits, and give them 12 months to adapt or change their processes to comply with the 10% limit.
A single recycling facility that sends 1,000 tonnes a month to landfill will face additional costs of nearly £1m per year if they cannot comply with the new rules.
Air passenger duty

The abolition of air passenger duty for children on economy flights will help to reduce the cost of holidays for families by £13 for a flight to Europe and £71 for a long-haul flight. The abolition for children under 12 had already been trailed, but the extension to children under 16 from 2016 will be welcomed.
The proposed new rules around showing the price of APD separately on the tickets will increase transparency and help people to see clearly how much of the cost of their flight is actually tax.