Support for High Energy use Businesses extended
High energy usage businesses, such as steel and paper manufacturers, are set to receive further support for electricity costs as the UK government has confirmed details of the Energy Intensive Industries (EII) compensation scheme.
The scheme will be extended for a further 3 years and its budget will be more than doubled.
The scheme provides businesses with relief for the costs of the UK Emissions Trading Scheme (ETS) and Carbon Price Support mechanism in their electricity bills, recognising that UK industrial electricity prices are higher than those of other countries. The scheme will now also provide support for companies that manufacture batteries for electric vehicles.
Treasury Starts Conversation to Reform UK Capital Allowance Regime
A publication aiming to kickstart a conversation with businesses about how to reform the UK’s capital allowances regime was published earlier this month.
The publication sets out how firms can work with the government on capital allowances to help foster a new culture of enterprise and growth in the UK, with responses requested by 1 July 2022.
The UK has a long-standing issue with productivity and one of the key underlying causes is a lack of capital investment.
According to OECD data, companies invest just 10% of GDP each year, compared with 14% in our competitor countries – our tax system doesn’t reward investment as much as other countries do.
The Spring Statement set out some illustrations of the types of changes government could make to the current capital allowances regime. This new guidance delves into those options in further detail, which includes:
- increasing the permanent level of the Annual Investment Allowance
- increasing the rates of Writing Down Allowances
- introducing general First-Year Allowances (FYAs) for qualifying expenditure on plant and machinery
- introducing an additional FYA
- introducing permanent full expensing
While some business organisations have called for full expensing to be introduced following the super-deduction, this could cost over £11 billion a year. The government is keen to hear views as to whether that would be well targeted if funding is available, and if it isn’t available, how to best target their approach.
UK Government sets out plans for how tech regulator will tackle dominance of major firms
Small businesses will be protected from predatory practices and consumers will get more choice and control over their online experiences as the government sets out its final vision for how the new digital markets regulator will boost competition to drive economic growth and innovation.
The majority of UK companies now rely on powerful tech firms to ensure customers find their business online. These firms control key online gateways for millions of internet users and give preference to their own apps and browsers. They are also able to set their own prices for the online services they provide businesses without challenge, which can be passed on to consumers.
The impact of weakened competition is stark – the Competition and Markets Authority estimates that Google and Facebook made excess UK profits of £2.4 billion in 2018 alone – harming consumers through higher prices.
In response to its consultation issued last year, the government has set out its plans to give statutory powers for the Digital Markets Unit (DMU) to allow it to enforce pro-competition rules and rebalance the relationship tech giants have with consumers and businesses, so they are better protected from unfair practices. The DMU is a new watchdog to make sure tech companies don’t abuse their market power.
The proposals aim to make it easier for people to switch between Apple iOS and Android phones or between social media accounts without losing their data and messages. Smartphone users could get more choice of which search engines they have access to, more choice of social media platforms as new entrants enter the market, and more control over how their data is used by companies.
It is hoped UK small and medium-size businesses will get a better deal from the big tech firms which they rely on to trade online. Tech firms could need to warn smaller firms about changes to their algorithms which drive traffic and revenues.
The measures will also make sure news publishers are able to monetise their online news content and be paid fairly for it, with the DMU given the power to step in to solve pricing disputes between news outlets and platforms. App developers would be able to sell their apps on fairer and more transparent terms.
The government will introduce legislation to put the Digital Markets Unit on a statutory footing in due course.