A government u-turn has devastated the community energy sector, according to Co-operatives UK. On 26 October treasury minister David Gauke announced removal of EIS tax relief for community energy schemes receiving subsidies, from 30 November. Affected schemes will remain ineligible for Social Investment Tax Relief (SITR), even after it has been enlarged.
Co-operatives UK policy officer James Wright said this reverses announcements in the 2014 Autumn Statement and the 2015 Budget Statement. “We’d expected that an expanded SITR would be opened to community energy schemes while EIS would continue for six months after changes to SITR gained State Aid approval,” he said.
“Given that we fought so hard last year to secure continued support for community investment in renewables, including providing clear evidence of just how important it is, and have been given numerous assurances from government, this is a really heavy blow.” Co-operatives UK research last summer showed removal of all tax reliefs could reduce community investment in renewables by 59%.
Mr Wright said: “It’s extremely disappointing and damaging for government to have moved the goalposts for these businesses so suddenly and dramatically by slipping the measure in by stealth.” Co-operatives UK is asking HM Treasury why it has changed its mind and how it justifies implementing policy for business this way.