In terms of support for the Energy Efficiency Sector, there were no new announcements, as Energy Security and Net Zero Secretary Ed Miliband covered most of what was said in his speeches last month.
· Great British Energy is to be based in Aberdeen, as we know, and act as an investment vehicle for investment into energy generation, however there is still much more detail needed about how it will work, and how it will spend its £125m annual operating budget and £8.3bn initial capitalisation funding.
· Carbon Capture and Storage will receive £25bn over the next 25 years.
· Support for Green Hydrogen Production was announced, but it is not clear how much has been set aside to support 11 production sites around the UK.
· The Labour Party Warm Homes Plan is to be implemented with £3.4bn spread over the next three years. Currently the only elements of this plan we have any detail about are the Warm Homes: Social Housing Fund (what was SHDF) and the Warm Homes: Local Grant (what was HUGS). The government said the funding included £1.8billion to support fuel poverty schemes and would help over 225,000 households reduce their energy bills by over £200.
· The Energy Efficiency Standards Rental Properties plan is expected to enhance standards in rental properties, pushing for minimum efficiency levels equivalent to an EPC (Energy Performance Certificate) rating of C by 2030 for both private and social housing.
· There was also a pledge to provide £1bn to the existing Public Sector Decarbonisation Scheme to assist with work and projects to cut emissions from public buildings for functions such as heating, and in a move to further decarbonise industry, the government has extended the Industrial Energy Transformation Fund with an additional £163m allocated until 2027.
The lack of Energy Efficiency specific announcements however does not mean that the Budget will not have an impact on our sector.
· 6.7% Increase in minimum wage
o While the sector generally pays above the minimum wage, any increase in minimum wage will have a ripple effect on wages across the industry. This means the labour costs for energy efficiency projects will increase significantly over the next year.
· 1.2% increase in Employers National Insurance contributions
o The cost of employing people will go up to 15% of their salary.
o The minimum wage increase will bring more people above the threshold where employers must start paying Employers NI, but the Chancellor has also moved that threshold from £9,000 to £5,000, so even more staff will become eligible for Employers NI contributions.
o The government is however increasing employers NI Allowance from £5,000 to £10,500 so companies will not have to pay the first £10,500 of their National Insurance Bill
· 20% and 80% Increase in Business Asset Disposal Tax (lower rate rising from 10% to 18% and main rate rising from 20% to 24%)
o The cost of selling a small business from now and after April 2026 will be painful for small business owners looking to sell up.
o The tax on selling a £1.5m business will go from £200k to £300k by 2026, while selling a £10m business has gone from £2m to £2.4m overnight.
o This might make mergers and acquisitions a bit more challenging
· IR35 Agency Workers to be paid through PAYE by umbrella agencies or client has to put them on payroll
o While the use of agencies for freelance contractors is not as prevalent in the energy efficiency sector as it is in general Construction or IT, the closing of this tax avoidance loophole means that employers will need to check how freelance subcontractors are paid PAYE. If there is no payment agency to pay self employed freelancers, employers may have to put them on their PAYE payroll systems.
o If contracts are paid through an agency there is a potential that the agency might fold or increase prices.
There are also some previously planned changes for next year which are still going ahead that members should be aware of.
· Business Rate Relief still being cut from 75% to 40%
o Companies with larger premises will now pay much more next year in business rates
o The Treasury is doing a consultation on Business Rates and if members want to be involved in that. You can contact transformingbusinessrates@hmtreasury.gov.uk by November 15th.
· New Rules for Company Vehicles
o The government plans to introduce new rules around the use and taxation of company cars in April 2026.
o Zero Emission cars will see Company Car Tax increase by 2% in 2028 and all other types of cars will increase by 1%.
· Benefits in kind
o The use of payroll software to report and pay tax on benefits in kind will become mandatory from April 2026, applying to Income Tax and Class 1A NICs. This will mean smaller companies will have to become more stringent in recording benefits in kind.