Recommendation 42

HM Government Rejected

78. Introducing incentives based on green energy installations could add significant complexity to the operation of the current property tax system, as well as having an impact on the Exchequer. SDLT is an important source of Government revenue, raising around £12 billion each year to help pay for essential public services. Council Tax is a vital source of income for Local Authorities expected to raise £44.1 billion across England in 2025–26. The Government keeps all taxes under review and welcomes representations to help inform future decisions on tax policy, as part of the tax policy making cycle and Budget process. The Government recognises the importance of reducing carbon emissions across the housing sector. However, we do not plan to review council tax on the basis of embodied carbon. 79. All domestic properties in England are placed into one of eight council tax bands based on their capital value in 1991. This will reflect a range of factors including the size, layout and location of the property. The overall level of council tax charged on a property depends on the band of the property and the rate of council tax set by the local authority. Councils already have the powers to provide discretionary council tax reductions where they consider this appropriate. 80. Additionally, council tax is a local tax on domestic properties to fund essential services, and it is usually paid by occupiers rather than owners or developers, who make decisions about construction materials and design. As such, tenants or buyers of pre-built/ planned dwellings have no control over how the property is constructed. This approach would risk rewarding efficiencies that are outside the control of those paying the tax. The Government has no plans to introduce lower bands or mandatory discounts for properties with lower levels of embodied carbon.