As part of its commitment to net-zero emissions by 2050, the UK government announced in 2019 that it had committed to reducing net greenhouse emissions by at least 100% compared with 1990 levels.
It is possible for businesses to help the UK achieve its net zero goals, which can help stop global warming and mitigate the effects of climate change. Businesses can also benefit from being net zero because it is not just good for the environment. In order to appeal to consumers and other businesses, companies must demonstrate their commitment to environmental issues.
Several strategies can be employed to help your business achieve net zero. The following steps will help you get started.
What is the best way to reach net zero for my business?
Find out how much carbon you are emitting
To make a meaningful impact on reducing your carbon emissions, you first need to know how much your business emits. When you conduct a quick search online, you’ll find a number of tools that will help you calculate your carbon footprint.
You can then start searching for eco-friendly and economically sound solutions for your workplace to get on the path to net zero as soon as you’ve done this.
Environmentally friendly assets qualify for tax deductions
As a result of the COVID-19 pandemic, a new and time-limited tax incentive has been introduced to boost productivity and kick-start capital investment.
There will be a 130% first-year tax relief available for businesses making expenditures between 1 April 2021 and 31 March 2023. A 50% relief is available for other assets as well.
In addition to the 130% or 50% rates, the following items can also be claimed:
- Pumps for heating and cooling
- A charging point for electric vehicles
- Photovoltaic panels
- System for monitoring a building
- Heating systems with low energy consumption
- Turbines that generate wind
As a result of many of these, these businesses will be able to reduce costs and increase efficiency.
“Super Deduction offers increased tax relief for companies investing in certain capital assets, including many environmentally friendly ones,” said John McCaffery, Tax Partner and Head of Tax at Alexander & Co Chartered Accountants and Tax Advisors.
The purpose of this relief is to accelerate investment and businesses looking to make capital investments in the future should consider capitalizing on these generous time-limited reliefs.”
Electric company cars should be invested in
To reach your net zero goals, update your company’s fleet to electric vehicles if your company has company cars.
Making the switch to an electric vehicle now can be beneficial, even though the upfront costs can be higher than those of a petrol or diesel vehicle. It is recommended to make the switch to electric or hybrid cars sooner rather than later because petrol and diesel cars will be banned in 2030. As a result, electric vehicles have a lower fuel cost per mile, a lower road tax, and are exempt from congestion charges. Tax benefits are also associated with electric company vehicles.
Businesses can claim capital allowances for cars they purchase and use specifically for business purposes; this allows a portion of the vehicle’s value to be deducted from profits before taxes. Company car tax rates, or Benefit in Kind Rates, are currently frozen at 2% on electric vehicles until 2025.
Due to this lower tax rate, EVs can be offered at lower taxable costs than petrol or diesel vehicles. In addition to reducing their environmental impact, this has financial benefits for both the employee and the company.
Electric vehicles can be offered to employees at a significantly lower tax rate than petrol or diesel vehicles because of this lower tax rate. Additionally, electric vehicles can help businesses reduce their environmental impact while providing financial benefits to employees and companies.
Provide environmentally friendly and low-carbon products and services
You can give your business a competitive edge by making your products and services low carbon, or by promoting environmentally-friendly alternatives.
People are becoming increasingly aware of the environmental impacts of their shopping habits, and many are even willing to pay more for sustainable goods and services.
Almost every age group is willing to spend more money on sustainable goods and services, according to a 2020 report by First Insight. Almost 90% of Gen Z consumers are willing to spend an additional 10% for eco-friendly alternatives than they normally would.
Your business can benefit financially and environmentally by taking these small and attainable steps towards becoming net-zero. As there is a growing interest in shopping and investing in brands and companies that care about the environment, becoming net-zero can help attract new customers to your business as well.