Handling environmental taxes can help your business save money while saving the planet

Businesses are facing a tough time with rising operating costs and economic uncertainty.

On top of this, there are the additional pressures placed on cash flow by environmental taxes, to which many businesses neglect to pay close attention.

Understanding environmental taxes and reliefs is essential for businesses that want to be more sustainable environmentally and economically.

What is changing with environmental taxes?

While it might seem like the lack of new taxes is a cause for businesses to relax, the existing environmental taxes are not static and can cause problems if left unchecked.

Businesses might be operating with outdated figures when creating their financial forecasts, resulting in a loss of financial stability later down the line.

For waste that contains less than 30 per cent recycled content, the Plastic Packaging Tax (PPT) is a notable financial burden.

It has risen from £217.85 per tonne to £223.69 per tonne and will likely continue to rise in subsequent years.

This is because it has risen every year since it was first introduced as the Government aim to make sustainable packaging a more financially beneficial option.

This is paired with the Landfill Tax, which seeks to curb the amount of waste that is dumped.

The Landfill Tax has increased from £103.70 to £126.15 per tonne at the standard rate.

Recycling will become a better option as this tax will also rise in the coming years.

Are there any reliefs that can help businesses become more sustainable?

There are a good range of environmental reliefs that can encourage more sustainable practices.

Businesses can make the most of the Annual Investment Allowance (AIA) to deduct 100 per cent of qualifying plant or machinery expenditure from their taxable profits in the year of purchase, up to a £1 million annual cap.

This will allow them to install environmentally sustainable features such as solar panels, LED lighting and high-efficiency HVAC systems.

This can be paired with Enhanced Capital Allowances (ECA) to allow businesses to claim 100 per cent first-year relief on green assets.

A popular choice for this relief is the adoption of electric vehicles as businesses seek to modernise transportation.

Electric vehicles are at an incredibly low rate of three per cent for Benefits in Kind (BIK) compared to 25 to 35 per cent for petrol and diesel models.

Fuel prices are consistently rising and falling, leading to some uncertainty that can disrupt financial forecasts, so the more steady cost of electric vehicles can be tempting for businesses seeking to better control their finances.

There is a lot of uncertainty around the UK’s commitment to Net Zero, but your business can continue to embody sustainable values.

We can help you to mitigate the impact of environmental taxes while maximising the environmental relief you can access.

Make a business that is environmentally and financially sustainable by speaking to our team today!