This week, the government set out its plans for continued energy bill support for businesses, charities and the public sector.
The new UK-wide Energy Bills Discount Scheme will provide all eligible UK businesses and other non-domestic energy users with a discount on high energy bills until 31 March 2024, following the end of the current scheme at the end of March 2023.
The new energy scheme will help businesses locked into contracts signed before recent substantial falls in the wholesale price, manage their costs and provide others with reassurance against the risk of prices rising again.
Welcoming the scheme, Richard Fuller MP said:
Although wholesale energy prices are beginning to fall and have now gone back to levels just before Putin’s invasion of Ukraine, the risk of price volatility remains high – so the government recognises that businesses have the assurance that they can afford to keep on operating during this period, providing the certainty they need to plan ahead.
The new scheme also strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes.
This scheme is part of of a package of support to help small businesses in a challenging economic period.
Through the scheme, from 1 April 2023 to 31 March 2024, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill. The relative discount will be applied if wholesale prices are above a price threshold of £302/MWh for electricity and £107/MWh for gas.
A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries. A long-standing category associated with higher energy usage, these firms are often less able to pass through cost to their customers due to international competition. Businesses in scope will receive a gas and electricity bill discount based on a price threshold. More information can be found here.
In addition to the energy schemes, the government has also taken a number of further steps to support businesses:
- Increasing the Employment Allowance from £4,000 to £5,000 in April 2022, meaning 40% of businesses with Employer National Insurance Contribution (NICs) liabilities were unaffected by recent changes to Employer NICs.
- Protecting 70% of actively trading companies with the Small Profits Rate, which keeps the Corporation Tax rate at 19% for businesses with profits of £50k or less from 2023.
- Introducing £13.6 billion business rates package worth over the next 5 years to support the revaluation (England-only).
- Extending the alcohol duty rates freeze for six-months, providing certainty to pubs and breweries.
- Extending the Recovery Loan Scheme until June 2024, providing businesses with up to £2 million of government guaranteed finance.
