This week the world is celebrating Clean Air Day. In response, many businesses may be turning their attention to adopting green practices.
However, going green can come with additional costs, restricting accessibility for smaller businesses.
That’s why you must make the most of Government schemes that allow businesses to grow, invest, and succeed all whilst being more environmentally conscious.
Most businesses are already aware that you can claim capital allowances on taxable profits to reduce Corporation Tax. If your business uses energy or water-efficient equipment, you can claim under the Enhanced Capital Allowance (ECA) scheme.
Under the ECA, you can claim a 100 per cent first-year capital allowance on qualifying equipment in addition to your existing Annual Investment Allowance (AIA) limit of £1 million.
This is as long as you do not claim both normal capital allowances and ECA for the same equipment.
You can claim ECA on sustainable technologies such as:
If your business volunteers for a climate change agreement (CCA), you can receive a significant discount on the Climate Change Levy (CCL), which is a tax on the energy your business uses.
This voluntary agreement requires your business to report its energy use and carbon emissions compared to agreed targets.
If your business operates in an energy-intensive industry such as manufacturing, you might want to consider a CCA.
A cycle to work scheme is a tax-exempt benefit for employees. It allows employers to loan bicycles and safety equipment to staff to encourage them to cycle to work.
If you have staff who live within cycling distance, this may be ideal for your business. Not only does this encourage staff to take a more environmentally friendly route to work, but also encourages healthier habits.
Adopting a greener approach to business could help you avoid more taxes and levies.
One example of this is if you use a landfill site to get rid of your business waste. In this scenario, you would need to pay Landfill Tax, which is charged at two separate rates. The rate for ‘inactive’ waste is £3.30 per tonne and the standard rate is £103.70 per tonne.
You can claim tax credits on Landfill Tax if your business sends waste from landfill sites to be recycled or reused.
As you consider which green initiatives you could adopt in your business, it is best to get expert advice. We can help identify the best schemes for your business to become more environmentally conscious.
Get in touch with our team today for more advice on green initiatives and tax reliefs.
