"The government has been using tax to disincentivise environmentally harmful behaviour for decades. But over this time, the damage caused by our homes has been, by and large, ignored"
- Craig Cooper - epIMS
The latest research from epIMS looked at HMRC receipt data to understand how the tax income from eight environmental-focused taxes has changed over the past year, including the Energy Profits Levy, Air Passenger Duty, and the Plastic Packaging Tax.
Green taxes are having the desired impact
The data reveals that across the eight environmental-focused taxes, HMRC collected a total of £33.9m in 2024. This marks an annual decrease of -3.3%.
Over the same time period, HMRC’s overall tax receipt income increased by 3.3%, so the fact that income from Green Taxes is falling suggests that they are having the desired impact in reducing behaviours that are deemed harmful to the environment.
For example, Landfill Tax, introduced in 1996, taxes waste that is sent to landfill. Over the past year, the amount of tax paid fell by -7.4%, suggesting that less waste went to landfill in 2024 than in 2023.
Similarly, tax income from the Climate Change Levy, which charges businesses for their energy use, fell by -8.8%, while Hydrocarbon Oil Fuel Tax income fell by 1.3%.
However, not all Green Taxes appear to be having the desired effect of changing our behaviour. Tax income from Air Passenger Duty increased by 10.3% in 2024, and Plastic Packaging Tax income rose by 1.5%.
Should we be doing more to tax the carbon footprint of our homes?
The fact that Green Taxes are broadly having a positive impact on our environmentally damaging behaviours begs the question of whether similar taxation should be introduced to reduce the enormous carbon footprint of our homes, given that previous research from emPIMS has revealed that UK homes emit 55 million tonnes of CO2e every year, the second-largest emissions total of any European nation.
To find out how the public feels about such a possibility, epIMS commissioned a survey of the UK population, which found that 65% of the public is in support of Green Taxes in general.
But when asked if they think similar taxes should be introduced to the property market to incentivise a reduction of the carbon footprint created by homes, opinion is split with 48% saying no, and 52% saying yes.
35% say that privately owned homes should be the primary target of any such taxes; 34% think social housing should be the focus; while 31% say it’s most important to tax the private rental sector.
40% believe any such tax should be collected as a one-off payment when purchasing a home; 35% think it should be collected on a recurring monthly/yearly basis; and 25% think it should be a one-off payment when selling a property.
In terms of what the tax should be applied to, most people think that waste management and the failure to recycle properly is the most important thing to tax (27%), followed by failure to make necessary energy-saving improvements to the home (26%), the installation and/or use of wood burners and open fires (18%), water and energy usage (15%), and a lack of renewable energy sources in the home, such as solar panels (14%).
“The government has been using tax to disincentivise environmentally harmful behaviour for decades. But over this time, the damage caused by our homes has been, by and large, ignored," comments COO of epIMS, Craig Cooper, "Labour now intends to correct this by insisting that all private rental properties have a minimum EPC rating of C from 2030, but this legislation is more about reducing household bills for renters than reducing our nation’s carbon footprint.
He adds, "Indeed, the private rental sector only accounts for a small portion of the homes, with the latest census showing that over 62% of people are owners, not renters. So if the government is genuine in its determination to reduce the emissions coming from the property market, it can’t rely on landlords alone and should consider new taxes that have proven to be successful elsewhere.”
