The March 2020 budget brought in several green changes that will affect small and large businesses in the UK. Four new tax measures aimed at cutting carbon, nitrogen, and plastic waste will come into effect between 2020 and 2022.
The measures are intended to fund new green features such as cycle lanes, recharging points, and solar panels. There will be a short adjustment and amnesty period of around one year for each measure to give British businesses time to prepare for changes.
As emergency budgets are expected in 2021 due to the Coronavirus (COVID-19) pandemic, all details are subject to change.
1) Plastic Packaging Will Be Taxed (From 2022)
The government has announced plans to levy £200 on each tonne of disposable plastic products manufactured in or imported to the UK. Any plastic produced with less than c.30% recycled content will be taxed from 1st April 2021. The final details of this tax have yet to be announced.
If you rely on common, disposable moulded plastics such as polyvinyl carbonate (PVC) for sanitation, storage, or shipping, you may find that you're subjected to indirect costs as manufacturers and suppliers raise their prices to adapt. It's worth considering untaxed, recyclable alternatives (such as glass and paper) as cheaper options for your one-use packaging.
2) Red Diesel Will Be Much Harder To Buy (From 2022)
Red Diesel is a type of standard petrol harmlessly dyed red to mark it as 'reserved' for vital industries. Historically, it's been available for farmers, constructors, builders, industrial workers, couriers, and power station workers to purchase in bulk to use in vehicles, machinery, and turbines. One advantage of using red diesel for businesses is that it is subject to a lower rate of fuel tax - Red Diesel Relief. However, diesel is now considered a local and global pollutant, an atmospheric hazard, and a significant contributor to climate change.
From 1st April 2022, Red Diesel Relief will only be made legally available to agricultural businesses, rail operators, and those using oil-fired, non-commercial (i.e. household and public) heating. Companies will be encouraged to switch to electric, rechargeable equipment (where possible). Some other industries may be exempt (pending government consultations). Some biofuel and biomass exemptions and subsidies will also be cut back.
3) Less Gas Relief, More Electric Incentives
Since 2001, all UK gas and electric companies and much of Britain's heavy manufacturing, retail, and service industries have been subject to a special tax called the Climate Change Levy (CCL). CCL charges each company a fee for each kilowatt-hour (KW/H) of electricity, gas, and solid fuel used.
The government wants more homes and businesses to use electricity over gas for heating, power, and cooking. This is to boost the use of renewables and cleaner, centralised power stations. CCL will be increased to £0.00406 per KW/H for gas use, while electricity rates will be decreased to £0.00811 per KW/H from 6th April 2020. Further discounts on hourly rates can be obtained by signing up for the Climate Change Agreement Scheme (CCA), which fixes a company's local environmental obligations in law.
4) Slightly Higher Landfill Costs
Cutting landfill waste is a top priority for any government. To conserve green space and encourage recycling, landfill waste tax will be increased to £94.15 per tonne for standard business waste from 1st April 2020. You may qualify for a reduced 'essential landfill' rate of £3.00 per tonne by recycling as much rubbish as you can.
Flooding Compensation
If you've been affected by the Winter 2019/20 floods or you think your business might be at risk in the future, you can apply to a special relief fund set up for victims of flood damage. The government may help cover the cost of repairs to your building(s) or the construction of permanent flood barriers.
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