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How helping the environment can improve your finances

As outlined in the King’s Speech, the UK is heading towards Net Zero by 2050. 

Reducing your business’s environmental impact not only puts you on this path but also provides you with the opportunity to save money. 

The Government offers a variety of incentives to encourage businesses to improve how environmentally friendly they are, from taxes and tax reliefs to schemes. 

Knowing which applies to your business could save you and your business a lot of money. 

Climate Change Levy 

The Climate Change Levy (CCL) is a tax on energy delivered to non-domestic users in the UK and is paid at either main rates or carbon price support (CPS) rates. 

The main CCL rate is paid on: 

If your business is industrial, commercial, agricultural, or public services, you will be paying the main CCL rates. 

However, if your business uses only small amounts of energy or is a charity engaged in non-commercial activities, you do not pay the main rate of CCL. 

If your business uses large amounts of energy, you can enter into a climate change agreement with the Environment Agency. This will allow you to pay reduced rates on CCL. 

Capital allowances 

When you are sourcing technology for your business, it may be more beneficial to purchase low or zero-carbon technology. 

Capital allowances are a type of tax relief for businesses that allow you to deduct some or all of the value of an item from your profits before paying tax.  

This can be used for purchases such as equipment, machinery, and business vehicles.  

Whilst Annual Investment Allowance (AIA) allows you to claim up to £1 million on purchases, this can be extended by using a 100 per cent first year allowance for ‘enhanced capital expenditure’. 

This enhanced capital allowance can be claimed for: 

These can all be claimed for on your tax return. 

Tax on plastic 

The Plastic Packaging Tax targets single-use plastic that has less than 30 per cent recycled plastic.  

It is applied to those who import or manufacture over 10 tonnes of finished plastic packaging components. 

Whilst this may not directly apply to your business, it does affect the price of plastic packaging.  

Switching to a recyclable form of packaging can help to save money in the long term, as well as reduce your business’ waste. 

In many cases, the choice that is better for the environment is also better for your long-term business finances. 

For help with streamlining your business finances, get in touch with one of our experts today. 


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