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Taxation: Combined Heat and Power

Treasury written question – answered on 15th October 2012.

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Photo of Phil Wilson Phil Wilson Opposition Assistant Whip (Commons)

To ask the Chancellor of the Exchequer what assessment he has made of the effect of removing levy exemption certificates on (a) the finance of existing industrial combined heat and power plants and (b) investment in industrial combined heat and power in the next 10 years.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

Budget 2011 announced the ending of the exemption from the climate change levy for electricity generated in combined heat and power (CHP) stations and supplied by electricity utilities from 1 April 2013.

CHP levy exemption certificates are used in the administration of this exemption. Budget 2012 announced that such certificates will not be issued for CHP electricity generated on or after 1 April 2013, but electricity utilities will have five years to use up any stockpile of certificates they hold.

This exemption was administratively complex and costly to the taxpayer. The impacts of removing the exemption are set out in the Tax Information and Impact Note published at Budget 2012. This can be found on the HMRC website:

http://www.hmrc.gov.uk/budget2012/tiin-0700.pdf

This Government are committed to creating an environment that supports manufacturing within the UK and continues to incentivise CHP overall. The Department of Energy and Climate Change is looking at alternative ways to address barriers to investment in good-quality CHP plants.

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