Industry ‘very concerned’ about impact of tax increase for AD plants

The Anaerobic Digestion and Bioresources Association (ADBA) has warned that increased tax rates will affect the UK’s ability to meet net-zero targets, as they will impact anaerobic digestion (AD) operators.

According to ADBA and renewables consultant Chris Handel, a change in HRMC’s Valuation Office Agency (VOA) methodology of how business rates are assessed could lead to AD plants having to pay bills they cannot afford, and ultimately going out of business.

AD plant
ABDA and Chris Handel consider this an ‘unacceptable threat’ to reducing the impact of climate change and decarbonising key sectors of the economy.

In the UK, there are currently 685 AD plants treating 46 million tonnes of organic waste every year.

They do so by capturing and converting organic matter into biogas, used for energy, transport, heat and farming. This organic waste would otherwise be sent to landfill or incinerated – where it would emit greenhouse gas (GHG) emissions.

Charlotte Morton, ADBA's Chief Executive, said: “Business rate payers in England have, so far, benefitted from a generous relief scheme under the government’s transitional rates relief scheme.

“But many AD operators will soon be coming out of this scheme and for the first time will face the full impact of the recent rates revaluation.

“This will mean high levels of charges akin to those now levied on AD operators in Scotland, Wales and Northern Ireland.

“We realise that the tax has to be paid – but it must be fair and reasonable, have regard to a plant’s ability to pay and fully reflect the challenges of running an AD plant.

“ADBA is very concerned about the impact this tax will be having across the industry."

Chris Handel, Managing Director of Handel Rating Consultants, added: “Government changes to the calculations used to work out business rates are likely to trigger higher payments for AD plant owners. This feels counterintuitive at a time when we need to green the economy.

“I’d urge any AD plant operator receiving a letter about business rates to do two things: firstly take professional advice, don’t just fill in their form. It could lead to higher tax bills.

“Second, have a think about joining our formal challenge to the government to seek a fairer deal for the industry.”