The COVID-19 pandemic may have transformed our attitudes to work and commuting. The lockdowns of 2020 highlighted the impact we can have on the environment. As business re-starts, we can evaluate a new normal. What can you do and, what tax incentives are currently on offer, to assist you in running a more climate-friendly business?
1. Work at home days for your employees.
- With many larger employers now considering a permanent homeworking culture, this will reduce the carbon cost of a daily commute.
- Without careful thought, some employers may double up on light and heat bills. Do you really need to light and heat city workspaces 24/7?
- See Working at Home: Employees
2. Cycle to work
- The Cycle to Work scheme permits an employer to provide cycles and/or associated safety equipment to employees tax-free.
- Cycles can be loaned or pooled, or employees wish to purchase their own equipment, given a tax-free employee loan instead.
- See Cycles & Cyclists' Safety Equipment
3. Install solar panels and PVC cells on your office roof to plug in to low cost almost carbon-free energy.
- Now that the subsidies have disappeared the cost of panels has reduced considerably, they are now just over £100 a panel.
4. Add an energy-saving boiler or heat exchanger and/or add a low-energy and fridge.
Tax breaks for items 2 - 4:
- Capital Allowances: Capital investments made between 1 April 2021 and 31 March 2023 and qualify for the main rate pool, will receive a 130% Super Deduction.
- You can alternatively continue to claim a 100% Annual Investment Allowance on purchases of up to £1,000,000 of plant and machinery until 31 December 2021 (dropping to £200,000 from 1 January 2022).
5. Trade your car or van for a lower emission vehicle
- Is it better to ‘use up’ all those old bad emissions cars and vans, bearing in mind that there is a major carbon cost in manufacturing a new clean car and disposal of an old one?
- There is a 100% first-year allowance for electric cars and also electric car charging points (see no. 6).
- In terms of Company Car Benefit for 2020/21, there reduced rates for Ultra-Low Emissions Vehicles (ULEV)
- A new zero-emission band.
- Five new bands based on zero-emission miles for ULEVs below 50g CO2 per km.
- Five bands for ULEVs between 51 and 75 CO2 per km.
- Four bands for ULEVs between 76 and 94 CO2 per km.
- In terms of Low-emissions Van benefits, from 6 April 2021
- Finance Bill 2021 reduces the van benefit charge (VBC) to nil for zero-emission company vans which are provided to employees and available for their private use.
6. Install a workplace electricity charging station.
- Finance Act 2019 backdated the benefits rules for Electric charging facilities.
- From 6 April 2018, the provision of free electric charging facilities for electric or plug-in hybrid cars will be a tax-free Benefit In Kind, provided it is made available for all employees at that workplace.
- The cost will qualify for a 100% FYA.
Grants and subsidies for 5. and 6.: See: Plug-in Car, Van & Motorcycle Grants
7. Charge the 10p Carrier Bag Tax on any carrier bags provided through your business.
- Even if your business is not above the compulsory 250 employee threshold. The business can keep the proceeds but you can donate the profits to environmentally friendly charities to ensure tax neutrality. Alternatively, switch to paper bags, helping the environment and your customers' pockets.
8. Wash your car in the rain: use a bio-friendly cleaning product.
- If you don’t want to get your feet wet then pay a teenager to do the job. Yes, they might spend the cash on online gambling, snacks or sweet drinks but at least they will be outdoors!
9. Make the office paperless
- Printers might cost less than £25 but they are made of non-biodegradable materials and ink is generally not friendly. They are pretty much thrown away items and they take a lot of carbon to produce.
10. Most businesses can do their bit for the environment as seen above, but if your business is subject to one of the four environmental taxes currently in force it is likely that there is even more that can be done! Consider these options in particular:
- Landfill Tax
- Additional taxes are charged when disposing of business waste using landfill sites. The tax is charged by weight so consider whether your waste can be recycled, incinerated or re-used.
- Climate Change Levy (CCL)
- Business users of Gas, electricity, LPG and coke are subject to the CCL, which is charged by the energy supplier. If you operate an energy-intensive business, consider signing up to a Climate Change Agreement. Meeting targets set in the agreement gives access to reduced CCL rates.
- Plastic Packaging Tax
- To be introduced in 2022, this new tax will target plastic packaging not containing 30% or more of recycled plastic. If this will affect your business, it is worth revisiting the manufacturing process if you are producing the material or switching products if you are importing. If you have to make scientific or technological advances on your product design, you may even qualify for R&D Allowances.