Energy expert calls for tax breaks for small businesses

Finance - News

Wednesday, 16 January 2008

A leading energy expert has called for exemptions from the Climate Change Levy for ‘green’ small businesses.

Stewart Grew, founder of CombatClimateChange.co.uk, said the exemption should apply to small businesses that choose to offset their annual CO2 emissions direct while investigating the most sustainable means of reducing their own emissions in the long term.

Grew explained that active participation fostered learning and accountability. He added that the Climate Levy was theoretically tax neutral, with money raised given back through reductions in national insurance, but that businesses had no say in how the money was spent.

“Nor do they have any visibility of where it has gone. In fact, the vast majority of small businesses – and their accountants – aren’t even aware that they can claw back the Levy tax through national insurance. Why all the secrecy?” Grew asked.

He said that if small businesses chose to offset direct the carbon emissions they could not reduce in the short term, they had to pay for this out of their own pockets. Grew advocated the abolition of the Climate Change Levy in this circumstance while retaining the benefit of tax reduction in national insurance.

Small businesses are faced with a high learning curve and few financial incentives, while large corporate energy users are let off up to 80 per cent of the levy if they come to voluntary climate agreements with the government to cut their use of energy. Grew said that this could delay the implementation of energy reducing initiatives.

The situation is exacerbated the longer it takes to implement energy saving technology and processes, as small businesses do not benefit from resulting cost savings in the interim.

Small businesses are exempt from the Levy if they change to a renewable energy supplier, but this can be cost-prohibitive for some.

Stewart said that small businesses should be rewarded and supported for taking steps to actively engage in energy conservation.

“Only by making a direct link between the emissions of a single business and a specific renewable energy project can small businesses begin to take ownership,” he added.

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