Budget 2016: Osborne scraps CRC, raises CCL and cuts tax for oil and gas

money jar

The UK Government has guaranteed tax reliefs for the oil and gas industry and plans to abolish the “bureaucratic and burdensome” Carbon Reduction Commitment (CRC).
As part of his Budget announcement last week, Chancellor George Osborne said he will cut the Supplementary Charge on oil and gas from 20% to 10% and scrap the Petroleum Revenue Tax (PRT).
The announcement is part of the government’s plans to simplify the regime for investors and “level the playing field between investment opportunities in older fields and infrastructure and new developments”.
Both the tax cuts will be backdated so they are effective from the 1st of January this year.
Mr Osborne also announced the CRC – a a mandatory reporting and pricing scheme to improve energy efficiency in large public and private organisations – will be scrapped following the 2018/19 compliance year.
The Budget document states: “It will significantly streamline the business energy tax landscape by moving to a system where businesses are only charged one energy tax administered by suppliers rather than CRC participants being required to forecast energy use, buy and surrender allowances.”
The Climate Change Levy (CCL), which is an environmental tax on energy delivered to non-domestic users – will be increased from 2019 “to recover the revenue” from abolishing the CRC and “incentivise energy efficiency in CCL-paying businesses”.
However, the energy intensive industries like steel will remain protected.
The Chancellor pledged £730 million in further auctions to back renewable energy technologies and £50 million for energy storage.