Tax relief for green businesses
How sustainable choices can help your bottom line…
Given the results of climate change, it makes sense to do all we can to reduce our emissions.
Going green is also starting to make financial sense for businesses. There are several tax breaks available to companies that are looking to make offices more sustainable places to work.
Tax reliefs have been introduced to encourage you to operate your business in a more environmentally friendly way. You may qualify for reliefs, be exempt from some taxes or qualify for beneficial loans if for example:
- you use a lot of energy because of the nature of your business;
- you’re a small business that does not use much energy;
- you buy energy efficient technology for your business.
The following schemes may offer your business some useful tax breaks.
The Chancellor announced in his March budget that from 1 April 2021, he would be introducing a new, temporary first year allowance Super Deduction tax scheme available to most companies.
Companies can claim a super deduction against taxable profits for the cost of new plant and machinery purchased between 1 April 2021 and 31 March 2023. The deduction is:
- An allowance of 130% of the qualifying plant and machinery which would usually be at the main rate capital allowances (18%)
- And 50% of the cost of qualifying plant and machinery which would usually be at the special rate capital allowances (6%)
For more information on the Super Deduction, read our full article HERE
Climate change agreements
Climate change agreements (CCAs) are voluntary agreements made by UK industry and the Environment Agency, to reduce energy use and carbon dioxide emissions. In return, operators receive a discount on the climate change levy (CCL); a tax added to electricity and fuel bills for non domestic users, which increases each year in line with inflation.
Electric cars and charging stations
If your business buys a new, zero emission electric car, 100% of the cost can be set against your taxable profits. Unlike the super-deduction, this applies to individuals and partnerships too, not just limited companies.
A company will save corporation tax at 19% . Individuals will save tax at their highest marginal rate. It should be noted that this will be reduced unless the car is used only for business. Personal use is not included.
Electric car charging stations also qualify for the new Super Deduction.
Research and development
Research & development tax relief is not new; R&D tax relief is a government backed corporation tax incentive, aimed at stimulating innovation and development in UK industries. However, if your business is using a green technology in an original or new way it may be worth investigating whether the relief is applicable to your project.
If you’d like to understand how your business may benefit from green tax breaks, please get in touch with our tax partner Robin Stevenson using the contact details below
Robin Stevenson - Tax Partner
Tel: 01825 763 366
Changes to UK company law: Economic Crime and Corporate Transparency Act 2023
New changes to UK company law are being brought in by virtue of the Economic Crime and Corporate Transparency Act 2023 (“ECCTA”). The aim of these changes is to tackle economic crime and improve transparency. Companies House has stated that its fees will increase to reflect its new functions and powers under the ECCTA. The measures are being brought in at different stages and dates.
Double cab pick ups to be classed as cars from 1 July 2024
For the last twenty years, private individuals have been able to run pick ups as company cars and pay significantly less tax on the benefit in kind, than if they were a regular saloon, hatchback or SUV. However, in note EIM23151 released on 12 February 2024, HMRC signalled its intention to rescind the tax break on all new pick ups ‘purchased, leased or ordered’ from 1 July 2024.
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