There is a way in which you can never pay tax again* (see foot of this page). Those of us that do pay tax can reduce our tax bill by taking sensible actions encouraged by the government.
Our stance with regards to tax is simple. We expect our clients to pay as little tax as they are legally entitled. We find most businesses agree.
Cars are perhaps the most common area where taxes can be reduced by taking positive actions. Enhanced capital allowances, reduced benefits in kind, £35 per year road fund licence (road tax) and less petrol duty can all be enjoyed by using a car emitting less than 120g of CO2 per km. This area is fully discussed on the car-emissions page.
Interest free loans to employees that are used to purchase season tickets for public transport do not attract a tax or national insurance charge. Salary sacrifice schemes can be used to enable bus travel to be paid for from gross salary saving tax and national insurance. Bicycles can be purchased by a business for its employees and directors with no tax or national insurance charge even if the cycle is used for pleasure, so long as the main use of the bicycle is commuting. Generous employers can provide employees with tax free meals and refreshments on “cycle to work” days.
Enhanced capital allowances are available on energy saving devices. This allows businesses to have up front relief for 100% of the cost of certain energy efficient plant and machinery that would otherwise only attract 25% allowance in the first year and a reduced amount each year thereafter.
Similarly 100% up front capital allowances are available on water saving equipment. This includes many practical devices that will reduce environmental impacts, save money and save tax.
Climate change levy
The climate change levy is a tax paid by every business. It is charged on energy, including electricity and gas, supplied to businesses and not to domestic consumers. Your business can reduce this tax charge by using less energy and, in the case of electricity, purchasing from a certified renewable source such as Good Energy.
Landfill tax is charged at £24 per tonne of waste. Although most businesses do not see this tax being paid specifically, they are effectively paying it. The collectors of landfill waste such as SITA and Biffa have to pay this tax and necessarily pass this on to your business. By reducing your waste, and recycling as much as possible, you will be reducing the amount of landfill tax that you pay.
Finally, a very useful action in reducing environmental damage is campaigning. Unfortunately (or perhaps fortunately) you cannot have tax relief for standing outside of No 10 imploring the government to divert some of the defence budget towards conservation. You will however obtain tax relief if you donate to charity, and you may want to choose a charity that will campaign on environmental issues.
There are tax benefits attached to many environmentally friendly actions. These are likely to increase, regardless of the colour of the next government. This is certainly an area that contractors and business owners should be aware of and be updated on a regular basis.
*To legally pay no tax your income must be less than £5,225 per year (2007/08).