How to improve your ‘green credentials’ and your bottom line

For businesses, the drive to reduce energy consumption and look at ways to move toward a net-zero future is definitely an aspiration for many. There are so many different schemes, people offering grants to review your carbon footprint and offers to make your lighting, heating and recycling more environmentally friendly.

But what are the ‘green schemes’ that really are beneficial for your business which will not only help with your ‘green’ credentials but also provide cost efficiencies for you and your staff?

Switching to green transport could provide more of a cost benefit than you would think. Yes, there will be a significant upfront cost but with the range of tax-saving incentives, now could be the perfect time to look at your company vehicles. Add to that the rapidly rising cost of fuel, those savings could be even higher.

Apart from the obvious reduction in fuel costs there are a range of other benefits associated with electric vehicles. These include:

• Reduced Benefit in Kind (BIK) bands for electric vehicles
• Government grants
• National Insurance savings
• Exemptions from Vehicle Excise Duty (VED)

As employees are looking more closely at the benefits that employers can offer, and with a more competitive recruitment market than ever before, did you know that you can provide electricity at or near your workplace to employees who own their own electric cars without a benefit arising, provided this is available to all employees?

If an employer decides to install a charge point at an employee's home, there is no additional Benefit In Kind (BIK) tax on the basis it is associated with the provision of a relevant Company Car. To top it off, fully electric cars are exempt from both VED and the ‘expensive car’ supplement until 31 March 2025.

Electric vans are also zero-rated when it comes to VED – for now anyway. With the increasing number of congestion zones being bought into city centres, electric vans are excluded from the charges. Don’t forget by using an electric van, you will pay zero tax thanks to the BIK. Find out more about expenses and benefits of company vans here.

Through the Workplace Charging Scheme (WCS), businesses are offered financial support towards the up-front purchase and installation costs of electric charging points. A business can claim support for up to 40 EV chargers, with grants of up to 75% of the purchase and installation costs, to a maximum of £350 per unit. Where an employee owns or leases an electric vehicle, they are also entitled to a grant through the Electric Vehicle Homecharge Scheme (EVHS).

Electric bikes could also be a great option for employees and help to encourage a culture of health and wellbeing. An electric bike could qualify for the cycle to work scheme as long as it doesn’t have a motor-assisted speed exceeding 25km/h and the electric motor is less than 250 watts in power. The scheme allows employees to pay for a cycle by way of a deduction from their gross salary, thereby saving tax and NI.

An employee could also exchange part of their salary for a non-cash benefit, such as a company vehicle through a salary sacrifice scheme. For vehicles that are fully electric or plug-in hybrid that produce less than 75g/km of CO2, salary sacrifice offers a cost-effective way of driving an EV. Through a salary sacrifice scheme, a single monthly payment is taken that covers leasing, maintenance and insurance of an eligible EV. This amount is taken from the employee’s salary before tax and NIC meaning both the employee and the employer save money.

Businesses can offset the cost of vehicles purchased through capital allowances claims. From April 2021 new zero-emission cars are eligible for 100% deduction for corporation tax purposes in the year of acquisition. Prior to April 2021 new cars with CO² emissions of 50g/km or less qualified for the 100% deduction.

To encourage the adoption of electric vehicles in the UK, the government has introduced a plug-in grant. This is now restricted to £1,500 for an eligible plug-in hybrid car or van where it costs less than £32,000 including VAT and delivery charges. Further information can be found here.

Businesses could also benefit from business rate exemption for any plant and machinery used to generate and store renewable energy onsite. Starting in April 2022, businesses will also be able to benefit from 100% relief for eligible low-carbon heat networks with their own rates bill.

For any help or advice around tax and reliefs for green projects and environmental business efficiencies, do get in touch with our specialist advisers.