With the nation’s Net Zero goal in mind, we’re all working towards becoming more eco-friendly.
So, opportunities to reduce your business’s tax bill whilst contributing to a greener future come as good news.
Green taxes, which include taxes on fuel consumption or using plastic packaging, aim to discourage activities that have negative impacts on the environment.
Of course, by avoiding these activities you will not incur these taxes. Alternatively, you could reduce your overall tax bill by engaging in more environmentally friendly practices.
To help you out, we have outlined some of our green tax-saving considerations:
Electric vehicles (EVs) have been growing in popularity in recent years, and when thinking about the tax savings, this is hardly surprising.
It should be noted that company cars that are also accessed for private use, are classed as a taxable benefit and will be subject to Benefit in Kind Tax (BIK).
However, EVs currently have the lowest BIK rate of two per cent (2023/24). When compared with petrol, diesel and hybrid vehicles.
Taking advantage of Capital Allowances
You can reduce the amount of Corporation Tax that you have to pay by claiming capital allowances.
These are available when you buy energy-efficient, or low or zero-carbon technology, plant, or machinery for your business.
The Annual Investment Allowance (AIA), provides a deduction of 100 per cent for qualifying plant or machinery expenditure against a business’s profits.
You can claim ‘enhanced Capital Allowances’ for a variety of eco-friendly upgrades to your business.
Additionally, incorporated companies can claim an allowance of 130 per cent on most new plant and machinery investments, known as the super-deduction.
Offering the Cycle to Work scheme
It could also be beneficial to implement a Cycle to Work scheme.
You could offer a ‘salary sacrifice’ option, which allows your employee to give up some of their salary. As an employer, you purchase or lease the bike from an approved provider, before hiring the bike back to your employee.
By participating in the scheme, employees can make significant income tax and National Insurance savings on their new bike purchase, taking as much as 47 per cent off the cost.
This can be a great way to reduce your business’s emissions, whilst making tax savings.
Need advice on tax savings? Get in touch.