Sustainable car allowance and green grants and for small businesses
Posted on 25th May 2020
The government has introduced a new emissions test and new car benefit percentages as part of its plan to encourage green transport.
This will apply to employees who have an employer-provided car that they can also use privately.
How charges will be worked out
To work out the taxable benefit, bands of CO2 emissions will be multiplied by the original list price of the vehicle. The maximum charge will be capped at 37% of the list price of the car.
A new emissions test
In 2017, the government announced that cars registered from April 2020 will be taxed based on the harmonised Worldwide Light vehicles Test Procedure (WLTP).
The WLTP aims to refelct real driving conditions more closely, compared with the current test, known as the New European Driving Cycle. The government estimates that reported CO2 values could be, on average, 2 to 25% higher under the WLTP compared to the current test.
What are the rules?
Legislation has now been passed to amend the previously planned benefit percentages for 2020/21 to 2022/23.
Zero emission cars registered from 6 April 2020 will have a percentage of 0% in 2020/21 and 1% in 2021/22, before returning to the planned 2% rate in 2022/23.
Cars registered before 6 April 2020, will be covered by the existing test and there won’t be any further changes to percentages already set until 2022/23.
Green grants
Small businesses can apply for a range of grants to help them to be more sustainable. These include:
Energy-efficiency measures – projects ranging from small changes to your premises to make them more energy-efficient through to revising your production processes and plant to save energy could qualify for grants. Many of these are awarded locally, so they will vary depending on where your business is based.
Capital investment in equipment – grants are also available when you replace your plant and equipment to have a positive environmental impact. In some cases, there are grants to finance part of the cost.
If you're investing in equipment and you buy approved types, you can receive useful tax breaks and Enhanced Capital Allowances.
The Department of Energy and Climate Change (DECC) and the Department for Environmental, Food and Rural Affairs (DEFRA) are both involved in making grants to support business sustainability.
The Carbon Trust also provides support to small businesses and start-ups.
You will often need to provide financial information as part of the application process. We’ll be happy to help, so please get in touch.
Tagged as: Allowances
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