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Fears over increased business rates for UK AD operators

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Business rates are an “unacceptable threat” to anaerobic digestion (AD) operators, according to industry representatives, and will hinder the UK’s ability to meet its net-zero targets.

With charges escalating year-on-year, business rates are now a “real burden” to the AD industry and putting many plants out of business, according to the Anaerobic Digestion and Bioresources Association (ADBA) and renewables consultant Chris Handel. This issue is particularly critical considering the value of AD in addressing climate change, and the UK’s need to decarbonise agriculture, alongside other key sectors of the economy.

HM Revenue & Customs’s (HMRC) Valuation Office Agency (VOA) has been reviewing its business rates assessments and the change of methodology could lead to UK AD plants facing bills they could not meet, resulting in business closures and the loss of an important waste management and decarbonisation service.

There are currently 685 AD plants in the UK treating 46 million tonnes of organic wastes every year and recycling them into biogas and biofertilisers for the energy, transport, heat, and farming sectors. By capturing and transforming organic matter into alternatives to fossil-based energy and fertiliser, the AD industry delivers a 1% reduction in the UK’s greenhouse gas (GHG) emissions every year – equivalent to taking 2.3 million cars off the road. Fully deployed, ADBA believes the industry could abate the UK’s GHG emissions by 6% by 2030.

“Business rate payers in England have, so far, benefitted from a generous relief scheme under the government’s transitional rates relief scheme,” said Charlotte Morton, ADBA’s chief executive. “But many 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.”

ADBA has been working with rating practitioner, Chris Handel, in looking to bring the AD industry together to explore how to tackle this issue with the VOA and ensure that business rates remain affordable and fair.

Chris Handel, managing director of Handel Rating Consultants, commented: “Government changes to the calculations used to work out business rates are likely to trigger higher payments for AD plant owners. This feels counter-intuitive at a time when we need to all 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. Secondly, think about joining our formal challenge to the government to seek a fairer deal for the industry.”

Morton added: “We are confident that working together, our concerted action will give us a good opportunity to reset business rate charges to more realistic levels, benefitting not only the whole industry for the life of the plant but also the UK’s efforts to fulfil the country’s ambition to achieve its net-zero targets and address climate change.”