There are various tax breaks available to business owners that may help your company become more environmentally friendly.
Being an environmentally conscientious, sustainable corporation is no longer about public relations stunts. It’s all about guaranteeing your company’s economic sustainability and long-term success. There are various tax breaks available to business owners that may help your company become more environmentally friendly.
1. Electric cars will continue to be taxed at a low benefit-in-kind rate beginning in April 2022.
Small firms that choose completely electric cars will continue to pay very low corporate car tax rates in 2021-22. The rate of 1% of the list price in 2021-22 will grow to 2% in 2022-23.
This campaign is intended to encourage more small companies to invest in electric cars (EVs) and minimize their carbon footprint while traveling to and from meetings, seminars, and conferences.
2. Electric vehicle charge station vouchers are available.
With the growing popularity of completely electric cars – September 2021 witnessed a 49.4 percent rise in pure-electric car sales in the UK compared to the same month in 2020 – the need for more vehicle charging sites is stronger than ever.
Through the Workplace Charging Scheme, the UK Government’s Office of Low Emission Vehicles (OLEV) continues to provide a financial incentive for small companies to install their own EV charging stations.
This voucher-based initiative provides financial assistance for the initial purchase and installation expenses of electric car charging stations for workers of up to £350 per plug, with a limit of 40 sockets per application.
3. Participate in the Cycle to Work program.
Consider enrolling your company in the Cycle to Work program if you haven’t already. This 20-year-old arrangement is an increasingly common salary sacrifice scheme that allows employees to utilize road bikes provided by their employers tax-free.
Not only may your workers benefit from tax-free access to a new road bike and accessories, but companies can also profit from the Cycle to Work initiative. It is possible to claim for the whole cost of the bike as well as a savings of up to 13.8 percent of the bike’s worth in National Insurance Contributions (NICs).
Aside from the financial advantages for you and your workers, encouraging employees to cycle to work may help build a happier, healthier workforce while also reducing the number of commute automobiles on your local roadways.
4. Take advantage of increased capital allowances for energy-efficient devices.
Small firms wishing to invest in energy-saving technology may get tax advantages under the UK Government’s Enhanced Capital Allowance (ECA) programme for specified ‘Freeport’ areas in the UK.
Under the ECA plan, qualifying investments in suitable technology and products are entitled for 100 percent first-year allowances.
Simply put, you may deduct the whole first-year cost of the investment from your taxable earnings for that year.
Whether the ECA plan seems appealing, make sure you get guidance on it as soon as possible since the scheme will check to determine if your firm is located in a freeport zone. The plan is expected to continue until April 5th, 2026.
5. Tax breaks for research and development (R&D) for the creation of greener goods or services
Even better, if your company invests in research and development to improve science or technology in your industry, you may be eligible for R&D tax reduction or tax credits.
Small and medium-sized enterprises (SMEs) may claim R&D tax reduction if they have fewer than 500 workers and a revenue of less than €100 million or a balance sheet total of less than €86 million.
SME R&D tax relief allows you to deduct an additional 130 percent of eligible R&D expenditures from your annual earnings, on top of the standard 100 percent deduction. This implies that for every £1 spent on research and development, you might deduct £2.30 from your taxable earnings.
Alternatively, if your company is losing money, the R&D tax credit enables you to claim a repayable tax credit of 14.5 percent, which may assist with cashflow during investment times.
The regulations governing which projects are eligible for relief are complicated and vulnerable to interpretation. You must also guarantee that the relief is claimed correctly. If you’re unclear if your company qualifies, please contact us so we can put you in the running.