Green taxes encourage businesses to operate in a more environmentally friendly way. There are different taxes and schemes designed for different kinds and size of business.
You may be able to get reliefs or be exempt from some taxes – for example:
- If you need to use a lot of energy because of the nature of your business
- If you’re a small business that doesn’t use much energy
- If you buy energy-efficient technology for your business
You can also reduce your tax by applying for schemes to help you demonstrate that you’re operating more efficiently and producing less damaging waste.
Climate change levy
Climate change levy (CCL) encourages businesses to reduce their energy consumption or use energy from renewable sources. It’s a tax on:
- Solid fuels – like coal, lignite, coke and petroleum coke
The levy is included in your energy bill. You can often see it listed as a separate item.
Who it applies to
You pay the tax if your business is in the following sectors:
If your business only uses small amounts of energy it is treated as domestic and you don’t have to pay CCL.
Getting an exemption
Energy is normally exempt from CCL if:
- It won’t be used in the UK
- It’s supplied to or from certain combined heat and power schemes
- It’s electricity that’s generated from renewable sources
- It’s used to produce electricity
- It won’t be used as fuel
Paying a reduced rate
Some businesses get a reduction on the levy because they need to use a lot of energy in what they do – eg chemical industry businesses can get an 80% reduction.
Check if your business counts as energy intensive.
To qualify for the reduced rate, your business must meet energy-saving targets. Contact your industry trade association to find out more.
CRC Energy Efficiency Scheme
The CRC Energy Efficiency Scheme (formerly known as the ‘Carbon Reduction Commitment’) covers large, non-energy-intensive organisations. They include organisations like:
- Water companies
- Local authorities, including state-funded schools
- All central government departments
How it works
If your business qualifies for participation in the CRC Energy Efficiency Scheme, you should already be registered. You must now:
- Monitor and report your CO2 emissions from gas and electricity use
- Buy enough allowances to cover your annual emissions and surrender them at the end of the year
Find out more about the CRC Energy Efficiency Scheme on the Environment Agency website.
The EU Emissions Trading System (EU ETS) affects businesses from energy-intensive sectors – like the energy industry and certain manufacturers. It lets you buy and sell greenhouse gas emission allowances to reduce your organisation’s environmental impact.
Large organisations not covered by the EU ETS are covered by another scheme called the CRC Energy Efficiency Scheme.
How it works
If your business is covered by the EU ETS you must meet targets by:
- Cutting your business emissions
- Trading emissions allowances
You’ll need to open an EU Registry account so you can trade allowances. You can then trade allowances by:
- Trading directly with other businesses
- Buying or selling from intermediaries, eg banks and specialist traders
- Using the services of a broker
- Joining one of the several exchanges that list carbon allowance products
- Bidding at UK government or other EU member state auctions
Calculating your greenhouse gas emissions
Calculate your greenhouse gas emissions by multiplying the amount of each type of energy you use by the emissions each type of energy produces.
To do this, you need to know:
- How much non-renewable energy you’ve used – this information can be found on your gas, electricity and water bills, invoices and receipts
- The greenhouse gases produced by each type of energy (the ‘emission factor’) – these are updated every year
Capital allowances on energy-efficient items
When you buy energy efficient, or low or zero-carbon technology for your business, you can claim capital allowances. This reduces the amount of tax you pay.
If your business gets rid of waste using landfill sites, you pay tax on top of your normal landfill fees.
Landfill operators – what you must do
You need a permit to operate a landfill. You must also register with HM Revenue & Customs (HMRC) within 30 days of setting up. If you don’t you can be fined.
What to pay
The tax is charged by weight. There are 2 rates. You pay the lower rate on ‘inactive waste’ – for example rocks or soil.
Amount you pay:
Lower rate: £2.50 per tonne
Higher rate: £64 per tonne
You don’t have to pay landfill tax on:
- Dredging activities
- Quarrying and mining
- Pet cemeteries
- Inactive waste used for filling quarries
You can get tax credits if you send waste for recycling, incineration or reuse.
This is a tax on sand, gravel and rock that is dug from the ground or dredged from the sea in UK waters.
What you need to do
If you exploit aggregate in the UK for commercial reasons, for example if you’re a quarry operator, you must register with HM Revenue & Customs (HMRC).
Every quarter, you must tell HMRC the quantity of aggregates you have produced or sold.
How much you pay
You pay tax of £2.00 per tonne of sand, gravel or rock. You pay less on smaller amounts. For example, you’d pay £1.00 on half a tonne. You still pay tax if you import the materials.
You can get tax relief if you export aggregates or use them in a some industrial or agricultural processes. The key issue is whether or not the process is using the material as aggregate or not. If not, the aggregate is eligible for relief. Call the Excise helpline if you need more advice.
0845 010 9000
Certain materials are excluded from the tax, including:
- Industrial minerals
- Soil (in some circumstances)
- Vegetable or other organic materials
- Cut building stone
Read further guidance on the aggregates levy.At Bizorb we aim to provide the most accurate and up to date information to you. This article contains public sector information licensed under the Open Government Licence v1.0. If you spot any errors in this article please let us know.