By Clive Lewis, ICAEW’s Head of Enterprise
Staying solvent or generating profit is usually higher up the agenda than carbon footprint, but there are green incentives that can help businesses grow sustainably; writes Clive Lewis, ICAEW’s Head of Enterprise.
There are numerous incentives to encourage businesses to think green. Enhanced Capital Allowances (ECAs) grant tax relief to companies investing in new energy efficient machinery, green cars or water-saving equipment. One benefit is that the whole cost of the purchase can be written off against tax in the first year of purchase. This is why ECAs are sometimes known as ‘100 per cent first-year allowances.’ However, be aware that the qualifying criteria can be quite strict. ECAs can only be claimed on specific types of energy-saving products in particular tax groups.
The Climate Change Levy, a tax on energy delivered to non-domestic users, currently rises each year in line with inflation. The income raised from this tax is used to fund energy efficiency programmes, of which the Carbon Trust, a government-funded company that help businesses cut carbon emissions, is one.
If your business is energy-intensive, such as a printing firm or bakery, you can qualify for a reduction of up to 80 per cent on your climate change levy by signing a climate change agreement, in which you would commit to meeting set energy efficiency targets. The most straightforward way to find out more is to contact the trade association for your sector.
Interest-free green loans of between £5,000 and £100,000 can be awarded by the Carbon Trust to replace or upgrade existing equipment and appliances with more energy-efficient versions, or install energy-saving products such as insulation.
There’s also tax relief on low-emission cars. There are two ways cars with low carbon dioxide emissions can save on tax. If you are buying a new company car with emissions of not more than 110 grams per kilometre (g/km), you can claim a 100 per cent first-year allowance for its full cost. In addition, the taxable benefit to an employee who is provided with a company car to use privately will also be lower for cars with lower carbon emissions.
Is sustainability embedded in your business’s growth model? Have you demonstrated the bottom line benefits of trading sustainability, or is it in the DNA of your organisation? If so, then there is still time to submit an entry for the ICAEW Sustainability Award. To find out more about this category, visit The ICAEW Sustainability Award and register your entry online.
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