How tax can stimulate green investment to compete internationally
10 May 2024, 2 min read
Key takeaways
- Green innovation credit: Boost green R&D with an investment tax credit.
- Lower corporation tax rate: Encourage commercialisation by offering a reduced tax rate for profits from green technology development.
- Green super-deduction: stimulate green capital expenditure with a powerful capital allowance.
The UK must unlock its green growth potential to tackle climate change and supercharge the economy. The green economy offers unrivalled opportunities to meet our commitment to decarbonise by 2050 and to capture green growth that could deliver a GDP boost of up to £57bn annually by 2030.
Yet, the UK risks falling behind global competition. Both the US and Europe have introduced impressive reform packages (US Inflation Reduction Act and the EU Net Zero Industry Act) to incentivise green investment, using tax credits, subsidies, grants and loans.
Our recommendations
As part of these reform packages, other countries are being ambitious with how they use tax policy to support green investment. The UK’s approach to green taxation on the other hand has s
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