From April 2023, the tax charged against businesses producing or importing plastic packaging with less than 30% recycled materials has risen from £200 to £210.82 per tonne, payable by all organisations that manufacture or import over ten tonnes a year.
The Plastic Packaging Tax, first introduced in April 2022 as part of the Resources and Waste Strategy, is one of several reforms and new taxes designed to improve the sustainability and green credentials of UK businesses.
In this guide, we summarise some of the other changes to be aware of and outline the ‘green’ tax breaks that could be advantageous.
Landfill Tax is a charge applied where businesses dispose of waste produced via licensed landfill facilities, excluding certain types of waste that are exempt. Exemptions include by-products and waste generated through mining, dredging and quarrying.
From 1st April 2023, the tax has increased and is charged either on a standard or lower rate, with lower taxes payable where waste is categorised as inactive or inert:
The standard rate increased from £98.60 per tonne to £102.10 per tonne from April onward.
Lower rates are now charged at £3.25 per tonne, increased from £3.15 per tonne.
Inactive waste comprises things like soil or rocks, which are chargeable at the lower rate.
The Aggregates Levy
The Aggregates Levy is separate from Landfill Tax and applies to rock, gravel and sand that has been dug, dredged or imported, and any business engaged in these activities needs to register with HMRC to declare their use of aggregate materials.
Taxes are charged at £2 per tonne of any eligible material, although smaller volumes are charged pro-rata, and companies only pay tax if they produce or import materials rather than purchasing aggregates from a wholesale supplier.
There are tax reliefs available, depending on the use of aggregate, where some agricultural and industrial uses are either exempt or taxed on a reduced basis.
Climate Change Levies
Most larger organisations will pay a Climate Change Levy through their energy provider, with the tax payable on most fuels, including solid fuel, electricity and gas. The bill from your energy provider should itemise the tax rates you have been charged.
Businesses operating in commercial, industrial, public services or agricultural sectors are liable for the Climate Change Levy, although smaller businesses with very low usage may be exempt, and charities that do not have commercial operations are excluded.
Energy-intensive businesses that have an agreement with the Environment Agency can apply for significant reductions, as high as 92% against electricity and 86% against taxes levied on gas usage.
A Climate Change Agreement is voluntary but means businesses can decide to work towards reducing energy use and carbon emissions in return for discounts against the tax added to their utility bills.
Funding Support for Energy-Efficient Investments
The UK government has a target to reach net zero carbon emissions by 2050 and has varied funding programmes available to help businesses invest in new technology and energy efficiency measures.
Although the current funding round closed to new applicants on 17th February 2023, new funds open periodically with a total available of just under £5 billion. Examples of recently closed initiatives have varied targets and objectives, such as:
Proposing innovations to develop green financing products to improve engagement with residential energy efficiency upgrades.
Creating engineering designs and studies around low-carbon and hydrogen manufacturing.
Developing technologies used in heat pumps and associated equipment.
Designing new methods of extracting greenhouse gases from the environment.
The Find Current Funding tool is updated when new grant schemes open.
For more information about tax reliefs, exemptions, capital investments or research and development opportunities that may provide tax advantages or reduced tax exposure, please contact SAS Accounting at any time for further information.