There are several different types of environmental taxes in the United Kingdom. The 'green taxes for businesses' combine with a range of tax reliefs and energy efficiency schemes.
The guide explains how tax relief incentives can help your business become more energy efficient. Discover which schemes focus on off-setting the impact of enterprise on the environment.
Environmental taxes and reliefs have one primary aim. It is to encourage businesses to operate in a more environmentally friendly way.
UK Government operate a range of green taxes and schemes for various business types and sizes. So, you might be exempt from some taxes, or get reliefs, if:
Note: Applying for certain schemes to help you demonstrate that you operate more efficiently, and produce less damaging waste, means your business can pay less tax.
There are two different rates for the Climate Change Levy (CCL). Thus, you would either pay the main rates or the Carbon Price Support (CPS) rates.
Your business would pay Climate Change Levy at the main rate on:
Note: You will find Climate Change Levy main rates and allowances listed on the energy bill for your business.
As an end user, you would pay the main rates of CCL if the business you are running is one of these sectors:
If a supply qualifies for one of certain types reliefs, CCL would not be payable at all - or payable at a rate below the main rates. So for example, you would not pay main rate of CCL on certain supplies, such as:
As a rule, electricity, gas, and solid fuel will be exempt from the main rates of CCL if (any):
Note: Check other exemptions and reliefs showing which supplies of taxable commodities the full rates of CCL do not apply.
You could get a reduction on the main rates of CCL if you (both):
In some cases, energy intensive businesses can get a 90% reduction for electricity. They may also qualify for a 65% reduction for coal, other solid fuel, gas, and liquefied petroleum gas (LPG).
Note: You can get extra advice and information from your industry trade association.
The purpose of CPS rates of CCL is to encourage industry to use low carbon technology for producing electricity. Thus, you would pay CPS rates for:
Owners of electricity generating stations, along with operators of combined heat and power (CHP) stations, pay CPS rates of CCL.
CPS rates do not apply to certain suppliers. They include small generators, stand-by generators, and generating stations in Northern Ireland.
The CRC Energy Efficiency Scheme was previously called the 'Carbon Reduction Commitment'. The new version covers large, non-energy-intensive organisations, such as:
Businesses that qualify for the CRC Energy Efficiency Scheme should already have registration. But, you now need to:
The EU Emissions Trading System affects businesses from energy-intensive sectors. In most cases, it relates to the energy industry and to certain types of manufacturers.
In short, the scheme allows you to buy and sell greenhouse gas emission allowances. The main purpose of doing so is to reduce the environmental impact produced by your organisation.
The CRC Energy Efficiency Scheme (details above) covers large organisations that the EU ETS scheme does not cover.
If the EU ETS scheme does cover your business, you will need to meet targets. These will include cutting business emissions and trading emissions allowances.
The first step is opening an EU Registry account so that you can trade your allowances. You would then be able to trade allowances by:
You would calculate your greenhouse gas emissions by multiplying the amount of energy used by the 'emissions they produce'. You would need to work this out for each type of energy that you use.
So, to carry out this calculation you would need to know:
Note: Department for Business, Energy & Industrial Strategy produce emission conversion factors for greenhouse gas company reporting to help you calculate carbon emissions online.
Buying energy efficient technology, or low or zero-carbon technology, for your business means you will be able to claim capital allowances. This will reduce the amount of taxation that you pay.
Businesses that get rid of waste using landfill sites will pay tax on top of the normal landfill fees. HMRC produce further guidance on who pays Landfill Tax on waste at unauthorised sites.
Note: Getting rid of waste at sites not authorised for landfill means you will get charged Landfill Tax. There may also be a penalty or court action involved.
You will need to:
There are two individual rates for Landfill Tax (charged by weight). For example, the lower rate would apply to 'inactive waste' (e.g. rocks or soil).
The 'Loss on Ignition' testing regime was introduced on the 1st of April 2015 to improve compliance by helping prevent mis-description of waste fines for Landfill Tax purposes.
If your landfill site accepts waste fines, you may need to carry out a loss on ignition test to help determine the rate of tax to pay.
Note: Sending waste from landfill to be recycled, incinerated, or reused means you will be able to get tax credits.
There is a tax on sand, gravel, and rock (called 'Aggregates Levy') which relates to substances that have been (any):
You would need to register for Aggregates Levy with HM Revenue and Customs if your business exploits aggregate in the United Kingdom (e.g. a quarry operator).
Note: Remember to notify HM Revenue and Customs (HMRC) how much aggregate you produced or sold every quarter.
You would pay taxation of £2 per tonne of sand, gravel or rock. The price for smaller amounts is less (e.g. £1 per half a tonne). You would still need to pay the tax even if you import the materials.
Exporting aggregates, or using them in some industrial or agricultural processes, means you can get tax relief. It may be eligible for relief if you do not use the material as aggregate.
The rules on environmental taxes exclude certain materials from the tax. Typical examples include things like soil, vegetables, or other organic matter.
Aggregates Levy Helpline
Telephone: 0300 200 3700
Textphone: 0300 200 3719
Monday to Friday: 8am to 6pm
Closed weekends and bank holidays.
Note: HMRC produce a general guide to Aggregates Levy (UK tax on the commercial exploitation of rock, sand, and gravel).
Green Taxes, Reliefs, and Schemes for Business in United Kingdom