There is often a market advantage to pro-actively taking measures to address environmental responsibilities. There are also real financial benefits associated with environmentally sensitive behaviour.

Here are four ways in which businesses might improve their environmental performance while taking advantage of tax reliefs.

• Investing in energy-saving assets

It is possible to claim tax relief at the rate of 100 per cent for capital expenditure incurred on qualifying energy-saving assets - that is a full deduction given for the cost of the asset in year one. This is referred to as an enhanced capital allowance (ECA). Assets that qualify for ECAs appear on the Energy Technology List (see www.eca.gov.uk) and include certain expenditure related to boilers, combined heat and power (CHP) facilities and solar thermal systems. ECAs provide a cash-flow benefit and reduce the payback period on qualifying assets, making investment in these assets more attractive to businesses.

Loss-making companies are now able to claim a repayable tax credit for expenditure on qualifying energy-saving assets.

It is also worth noting that tax relief is now available on expenditure on thermal insulation for existing buildings, other than residential properties. It has only previously been available in relation to industrial buildings.

• Green motoring for large vehicles

The government has introduced incentives for drivers of larger vehicles to reduce their road tax. Drivers can tax their vehicles in one of the reduced pollution taxation classes when they produce a valid Reduced Pollution Certificate (RPC).

To be eligible for an RPC, the vehicle must:

- be fitted with Euro 5 or EEV engines and NOx control, provided they are registered in the UK prior to October 1, 2009; or

- have been registered in the UK prior to October 1, 2006, and have been adapted to achieve a higher emission standard than the standard required by the EU directive when the vehicle was manufactured.

• Green travel plans

There are tax and national insurance benefits for schemes designed to reduce employees’ reliance on cars for home-to-work and business travel. If an employer provides a nine-or-more-seater works bus to transport employees to and from work, provides free or subsidised travel on local stopping buses or if it pays subsidies to finance a public transport service that is useful to the employer, then there is generally no tax or NICs. Employers can also offer interest-free or low-interest season ticket loans of up to £5,000 per year. Similarly, there are tax and NIC benefits to schemes that encourage cycling to work.

• Re-developing brown field sites

Businesses opting to re-develop brown field sites can benefit from two different types of tax relief.

It is possible to claim tax relief equal to 150 per cent of the cost incurred on the cleaning of contaminated land. Loss-making companies are able to claim a repayable tax credit for expenditure incurred in cleaning contaminated land equal to 24 per cent of the expenditure incurred additional to any normal site preparation.

Projects that involve cleaning up brown field sites can involve sending waste from contaminated sites to landfill. Waste put to landfill is liable to landfill tax (£32 per tonne and rising by £8 per annum from April 2009 for the standard rate); however, there is an exemption for waste that relates to the re-development of brown field sites. This exemption can significantly reduce the costs of re-developing old industrial land.

Helen Devenney chairs the Chartered Institute of Taxation’s Environmental Taxes Working Group. She is a director in Deloitte’s Indirect Taxes Group in London.