In addition to rising operating costs and economic uncertainty, many businesses are finding themselves at risk of losing out due to environmental taxes.
Some of these are slipping under the radar and leaving businesses vulnerable to future cash flow issues if they do not adequately prepare for the impact these may have.
It is important to understand what changes are coming soon so that you can incorporate them into your financial forecasts and shift to more sustainable processes when necessary.
What environmental taxes are being introduced?
Part of the reason why the environmental taxes are going unnoticed by many businesses is that no major new taxes are being introduced.
Instead, the current pressure facing businesses comes from an increase in existing rates.
The risk here is that businesses may have already calculated the costs of environmental taxes only to discover later that they were working off outdated figures.
Recently, the Plastic Packaging Tax (PPT) rose to £223.69 per tonne of waste that contains less than 30 per cent recycled content.
As this is a significant increase from the £217.85 per tonne it was previously, businesses should be mindful of the kind of packaging they utilise in their operations.
As the tax has risen each year since its introduction, 2026 will likely see another increase as the Government aims to make plastic packaging less economically viable than recycled alternatives.
Similarly, the standard Landfill Tax rate is also increasing and is set to continue doing so until waste disposal is too costly.
The Landfill Tax has increased from £103.70 to £126.15 per tonne at the standard rate.
This will also continue to increase each year, so businesses should consider alternative means of waste disposal before the costs become too oppressive.
What reliefs are there to help businesses be more sustainable?
Environmental taxes come with a few carrots to complement the stick.
Environmentally conscious businesses can utilise Annual Investment Allowance (AIA) to deduct 100 per cent of qualifying plant or machinery expenditure from their taxable profits in the year of purchase, up to a £1 million annual cap.
Eligible expenditure will typically include the installation of solar panels, LED lighting and high-efficiency HVAC systems.
Alongside this, Enhanced Capital Allowances (ECA) can let you claim 100 per cent first-year relief on green assets.
These green assets can include electric vehicles, offering an incentive for any business looking to modernise transportation.
Electric vehicles are at an incredibly low rate of three per cent for Benefits in Kind (BIK) compared to 25 to 35 per cent for petrol and diesel models.
Embracing these incentives early and transitioning to sustainable vehicles can be a way to keep costs down as the price of fuel continues to rise and fall unexpectedly in the wake of global turmoil.
While the UK’s commitment to Net Zero is uncertain, there are plenty of reasons to embrace sustainability as soon as possible.
We are on hand to help your business avoid being stung by environmental taxes and instead lean into available reliefs to help boost your future cash flow.
Become environmentally and financially conscious by speaking to our team today!