30 taxation
How can businesses reduce their taxes by being green?
As the Government seeks to achieve its emissions target, it is looking at more ways to encourage ’good’ environmental behaviour. Here Kerry McKeown from Grant Thornton outlines some of the tax reliefs available to businesses displaying this good ’green’ behaviour
Kerry McKeown
Reducing income tax and NIC on company cars
the smaller the percentage used to calculate the taxable amount. Therefore if you provide employees with a lower emissions car, they will benefit from higher net pay and you will benefit from lower NIC.
Are repayable tax credits available?
100% allowances for energy-saving plant and machinery
To qualify for the 100% allowance the product or technology needs to be on a qualifying list or subject to the issue of a certificate at the time the expenditure was incurred or the contract entered into (although a claim cannot be made until certification is given).
The technology or product list is issued by the Department of Environment, Food and Rural affairs and can be found at
http://etl.decc.
gov.uk/etl. The technology list is updated monthly.
There are also 100% allowances for environmentally-beneficial plant and machinery similar to the above but for water technology.
Land remediation
This relief was introduced to encourage the re-development of ’brownfield sites’. Essentially for every £100 spent on qualifying land remediation, companies (but not unincorporated businesses) can claim a £150 deduction against taxable profits. A repayable tax credit can also be claimed in certain cases.
www.businessmag.co.uk
Land remediation includes the removal of contaminants from land and the removal of buildings and structures from derelict land. Land is considered contaminated if there are substances (eg poison or pollutants) in, on or under the land which cause, or may cause, harm or pollution to controlled waters.
If this could apply to your business then you need to act fast as this relief is due to be abolished after 2012.
Energy efficient cars and vans
Expenditure on an electric car or a car with low carbon dioxide (CO2
) emissions
(less than 110g/km up to March 31, 2013) is eligible for a 100% capital allowance. Currently 10% writing down allowances can be claimed for expenditure on cars with CO2
emissions of more than 160g/km and
20% writing down allowances for cars with emissions of between 110g/km and 160g/ km. These rates are due to be reduced to 8% and 18%, respectively from April 1, 2012.
100% first-year allowances can be claimed on expenditure on zero-emission vans between April 1, 2010, and March 31, 2015.
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2011
Companies meeting the following conditions may surrender losses arising for cash payments:
• The losses attributable to 100% allowances on energy saving or environmentally beneficial plant and machinery
• The loss cannot be otherwise relieved by the company
• The qualifying expenditure was incurred on or after April 1, 2008, and before March 2013.
The credit that will be paid to the company will be 19% of the loss surrendered, but cannot exceed the greater of the total PAYE and NIC for the loss period, or £250,000. There are claw-back provisions if the company sells the plant and machinery within four years of the end of the period for which the tax credit was paid.
Details: Kerry McKeown 023-8038-1100
kerry.r.mckeown@
uk.gt.com
An employee provided with a company car will pay tax based on the deemed taxable amount of the car, which is calculated by reference to the car’s list price when new and its CO2
emissions. The lower the emissions,
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