UK businesses have been urged to embed the circular economy in their operations to cushion themselves from future tax hikes.
The call comes from Reconomy, the recycling and waste management services provider, and follows new data showing environmental tax receipts have decreased in the past year, as businesses integrate sustainable practices into their business.
The latest figures from HMRC reveal the changing environmental tax landscape in the UK.
The data, which summarises the environmental tax receipts for the financial year ending 2024, reveals that the total provisional Climate Change Levy (CCL) – a tax to encourage reduction in gas emissions and greater efficiency of energy use-and Carbon Price Floor (CPF)- a tax on fossil fuels used to generate electricity -receipts for 2023/24 were £1,828 million.
This is £266 million (13%) lower than the prior financial year (£2,094 million) but £337 million higher than levels a decade ago in 2014/15 (£1,491 million).
Total provisional Landfill Tax (LFT)- a tax on the disposal of materials – receipts for 2023/24 were £489 million, which is £137 million (22%) lower than the financial year ending 2023.
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Meanwhile, the total provisional Aggregates Levy (AGL) – a tax on sand, gravel and rock that is dug from the ground or dredged from the sea in UK waters- receipts in 2023/24 were £350 million, which is £29 million (8%) lower than the financial year ending 2023.
Steve Gough, CEO at Valpak by Reconomy, said: “The latest Environmental Tax Bulletin from HMRC shows a notable decrease in tax receipts in the past year as businesses increasingly integrate sustainable practices into their operations and supply chains.
“However, while the receipts of certain taxes have eased off in the last decade, HMRC’s most lucrative taxes, the Climate Change Levy and Carbon Price Floor tax, have seen a net rise over the past decade, illustrating the government’s use of tax to incentivise business sustainability, the protection of valuable finite resources, and help meet their ambitious net zero targets.
“In order to cushion themselves from any potential tax hikes in the future, firms should consider embedding circularity into each of their business verticals.
“Not only can this minimise costs by identifying operational inefficiencies, but it can also help to ensure alignment with the government’s environmental expectations, enabling businesses to maintain competitiveness and protect their growth from the evolving tax landscape.”
Last month, Reconomy said it is on track to use 100% of its electricity through renewable sources by 2028.
