Five tax benefits available to your business for going green

There are several tax incentives available to businesses that can give your business a boost.

1. Electric vehicles will continue with low benefit-in-kind tax from April 2022

Businesses that opt for fully electric vehicles pay lower rates of company car tax. The rate for fully electric cars is 2% for 2024-25 (increasing to 3% in 2025/26) compared to up to 14% for non-electric cars.

It’s hoped this initiative will encourage more businesses to invest in electric vehicles (EVs) to reduce their carbon footprint on journeys to and from meetings, seminars and conferences. For more information on the tax benefits of electric vehicles look here.

2. Electric Vehicle charging points

The UK Government’s Office of Low Emission Vehicles (OLEV) continues to offer a tax incentives for businesses installing their own EV charging points via the Workplace Charging Scheme.

This voucher-based scheme offers financial support towards the initial purchase and installation costs for electric vehicle charging points for staff.

3. Take part in the Cycle to Work scheme

If you aren’t doing so already, consider offering the Cycle To Work scheme to your employees to encourage active travel as well as reducing your carbon footprint. This scheme is a popular salary sacrifice scheme, allowing employees to use bikes tax-free.

Not only can your employees benefit from having tax free access to a new bike, employers can obtain tax relief with the Cycle to Work scheme too. It’s possible to claim for the full cost of the bike, as well as a saving of National Insurance Contributions (NICs) up to 13.8% of the bike’s value.

Aside from the tax benefits for you and your staff, engaging your employees in cycling to work can also help create a happier, healthier workforce and reduce the number of commuting cars on your local roads.

For other ways on making your business more sustainable take a look at this article.

4. Claim enhanced capital allowances for energy efficient technologies

For businesses planning on investing in energy-saving technologies, it’s possible to secure tax breaks for these investments. The 100% first year allowance offers full relief for new and unused equipment including electric cars, zero-emission good vehicles and equipment for electric vehicle charging points.

The UK Government’s Enhanced Capital Allowance (ECA) scheme for certain Freeport locations in the UK, also means it’s possible to claim 100% first-year allowances on investments in eligible technologies and products.

5. Research & Development (R&D) tax reliefs for the development of greener products or services

Better still, if your business is investing in research and development to advance in science or technology in your particular field, you might be eligible for R&D tax relief or tax credits.

The rules determining which projects qualify for relief are complex and open to interpretation. You must ensure the relief is claimed in the correct manner. If you’re unsure whether your business qualifies, contact us today.

How we can help

If you would like more information about the tax benefits of reducing your business’ carbon footprint, call us on 0141 632 1863 or use our online enquiry form to arrange a free initial meeting to discuss the available options.

Last updated: 2nd May 2024