15th Jun 2021

Green Tax Incentives: Eco-friendly Solutions That Save Your Business Money

Air pollution is the single largest environmental health risk that we face today. As the UK becomes more conscious of the environmental issues facing the country, eco-conscious, sustainable practices are on the rise. To  bolster this, the government has introduced a variety of green tax incentives too.

Here at Blu Sky we’re serious about the environment, and we try our best to promote eco-friendly, clean air operations within our company on a daily basis (we’re not called Blu Sky for nothing, after all). That’s why, with Clean Air Day just around the corner, we’ve put together this blog to help your business to be more eco-friendly (and maybe save a few £s in tax benefits too!).

Electric Cars/ EVs

There’s no doubt about it, Electric Cars are the future! In fact, chances are there’s at least one person within your business who either owns an EV, or is thinking of buying oneSo what can your business do to promote the use of EVs?

The first solution would be to replace your company fleet with EVs. This would significantly reduce your company’s carbon footprint. And can also act as a huge incentive to potential candidates by showing your company cares about the environment.

The government also wants to reduce UK emissions, so there are a number of incentives in place for businesses looking to electrify their fleet!

Enhanced Capital Allowances Scheme

The government’s ‘enhanced capital allowances’ scheme allows you to claim first year allowances on low/zero emission vehicles. This means that you can deduct the full cost of the purchase from your profits before tax. What’s more, you can actually save on your Benefit in kind (BIK) tax! In 2021, the BIK tax on electric company cars is just 1%. This number was actually 0% in 2020, and will rise to 2% in 2022, so if you are thinking of making the switch, it’s better sooner rather than later.

If you don’t have the capacity to switch your fleet, or if you don’t offer company cars, another green solution is to offer on-site charging to those who need it. By installing EV charging points on your premises you can help to lessen employees’ charging worries, promote the use of EVs and improve your company’s image.

You can read more about this in our electric car tax benefits article.

Cycle to Work Schemes

Electric cars aren’t the only zero-emission travel option that offers business tax benefits! Another scheme that offers a green tax incentive is the ‘Cycle to Work’ scheme where your employees get an affordable way to buy a bike. Of course, this therefore encourages environmentally-friendly travel too.

Cycle to work schemes work through a salary sacrifice process. Employees save money on bikes and equipment through tax savings, and employers save money by reducing their own tax bill and recouping 113% of costs on employees’ equipment.

More than just being eco-friendly (switching to bike commutes can reduce an individual’s carbon footprint by 6%), cycling also has a range of other benefits. From increasing both physical and mental health, to improving employee retention and reducing parking congestion.


Recycling is a moral and eco-conscious practice to implement. What’s more, recycling your waste can actually save your business money in the long run! This is due to something called landfill tax.

Landfill tax is a fee that is required from all companies who send waste to landfills. Right now, the landfill tax rate is £96.60 per tonne of waste, and this number is only going to climb with each passing year.

We know it’s near-on impossible to recycle everything that your company disposes of. However, by bringing in recycling bins and encouraging their use within your business, you could cut your landfill tax by 10%, 30% etc.

Solar Panels

Solar panels, or Solar PV arrays, have been around a while, but thanks to recent advances, lower costs, and increased focus on green practices, they are now more popular than ever. In fact, the UK is installing solar panels faster than any other European country!

Solar PVs are proving to be so popular for a number of reasons. First of all, they can significantly reduce your overall energy bill, and on weekends and super sunny days, you can actually sell back surplus energy to the electricity board!

The energy that you do use will also be greener, no matter if solar power accounts for 5%, 10% or 100% of your energy usage. This can help your business to reduce its carbon footprint and hit green targets.

While solar panels may seem like a costly solution, you can take advantage of the government’s ‘super deduction tax break’ until 31 March 2023, to claim 130% tax relief on the installation costs. With this, solar panels can be extremely affordable for businesses to install. And if you take into account the potential savings and money made on energy sell-back, solar panels can often pay for themselves over a few years!

Invest in Green Tech

Modern developments in technology have created much more energy-efficient versions of the products and machinery that we have used for decades. These newer, eco-friendlier products often cost less to run, and will reduce your CO2 emissions. What’s more, you can even save money through the government’s enhanced capital allowances for eco-friendly plant and machinery.

Take a look at the full list of qualifying products here

Thinking of going green?

That’s great! We can help you understand the benefits and savings you could be making by implementing green energy solutions in your business. And as always, we’ll help you find the most tax/budget-efficient way to do it. Just drop us an email and we’ll do everything we can to help you make the change.