The Government has brought forward by a year, targeted business rate exemptions that were originally announced in the 2021 Autumn Budget as coming into effect from 1st April 2023. As part of his Spring Statement on 23rd March 2022, the Chancellor announced that this investment in energy efficiency and clean heat will be effective from 1st April 2022 to support the security of energy supply in the UK. LWA’s latest blog below provides an update on this announcement and details what it means for businesses.
The green plant and machinery exemption
As mentioned above, in October 2021 the Government announced business rate exemptions for eligible plant and machinery used in onsite renewable energy generation to be effective from 1st April 2023 until 31st March 2035. This will now take effect as soon as possible after 1st April 2022 as the Valuation Office Agency (VOA) is working to implement this exemption over the coming months, and it will be backdated to the date the regulations came into force.
This exemption from business rates includes eligible plant and machinery used in onsite renewable energy generation and storage, such as solar panels and heat pumps, wind turbines, and battery storage, as well as storage used with electric vehicle storage points. Although it will be brought forward by a year, this exemption will still last until 31st March 2035.
Full relief for low-carbon heat networks
There will also be a new 100% relief for qualifying low-carbon heat networks that have their own rates bill to support the decarbonisation of non-domestic buildings. This has also been brought forward from 1st April 2023 to 1st April 2022.
Other ‘green’ energy business rates exemptions
The above two exemptions being brought forward are in addition to other measures announced at Autumn Budget 2021, including a frozen business rate multiplier for 2022/23 for all ratepayers, and a 50% business rates relief for eligible retail, hospitality, and leisure businesses.
From 1st April 2022:
- There will be a widening of the relief available for the domestic installation of qualifying Energy-Saving Materials (ESMs) such as thermal insulation and solar panels.
- The list of qualifying ESMs will be expanded to include additional technologies, such as wind and water turbines, which had previously been made outside of the scope of VAT.
- Qualifying installations will be zero-rated instead of the current reduced rate of 5% however please note this will only be effective until 1st April 2022 until 31st March 2027, when the 5% rate will be reintroduced.
How do businesses claim the rates exemptions?
HMRC have not yet issued any guidance on how to claim the green business rates exemptions, however the guidance for local authorities on the heat networks relief will be published by the Department for Levelling Up, Housing and Communities (DLUHC) over the spring or summer.
The Government has confirmed that all of the above exemptions will be effective from 1st April 2022 and claims made once the guidance has been issued will be backdated to the date the regulations came into force.
Ensure you let us know
If you’re a client of LWA, please do let us know if you have implemented any of the above measures within your business, so that we can help you claim the exemption reliefs if needed, and to ensure they are accounted for.
If you would like any advice or further information about the green business rates exemptions, please do not hesitate to contact a member of our Corporate & Personal Tax team on 0161 905 1801 in Manchester or 01925 830 830 in Warrington.