In short: The UK tax system rewards some green investment and charges for carbon in other places. Companies can claim 100% first-year allowances on new zero-emission cars and electric vehicle charge points bought by 31 March 2027 (5 April 2027 for income tax), full expensing on qualifying plant and machinery, a new 40% first-year allowance from 1 January 2026, and enhanced relief for cleaning up contaminated land. On the cost side, the UK ETS prices emissions from power, industry, aviation and, from 1 July 2026, domestic maritime, while CBAM and Plastic Packaging Tax add further charges. TaxDigit's tax and sustainability team plans investment so the reliefs are claimed and the carbon costs are forecast.
Where tax meets your net zero plan
Most decarbonisation plans involve capital expenditure: heat pumps, solar, battery storage, efficient machinery, electric fleets and charge points. The timing and form of that spending decides how much tax relief you get. Main-rate writing down allowances fell from 18% to 14% from 1 April 2026 for companies, so claiming full expensing, the annual investment allowance or the right first-year allowance matters more than before.
Carbon pricing works the other way. If you operate an installation in the UK ETS, import CBAM goods or put plastic packaging on the market, carbon is a direct cost that should sit in your budgets, transfer prices and investment appraisals. We bring both sides into one model so the board sees the after-tax cost of each option.
- Companies investing in decarbonisationPlant, property, energy and fleet projects.
- Businesses electrifying fleetsZero-emission cars, vans and charge points.
- UK ETS participantsInstallations, aviation and maritime operators.
- Developers and property ownersContaminated and derelict land and energy-efficient buildings.
Led by Dr Attieh Moezoddin, Head of Sustainability & ESG Advisory (PhD, Built Environment)Reviewed by Amir Rafiei, ACCA Certificate in Sustainability for FinanceLast reviewed
What we do
Plant and machinery claims
Full expensing, the 50% special rate allowance, the 40% first-year allowance, the £1m annual investment allowance and pool planning around the 14% writing down rate. See capital allowances.
Zero-emission cars and charge points
100% first-year allowances for qualifying expenditure by 31 March 2027 (companies) or 5 April 2027 (income tax), plus benefit in kind planning for employees.
Land remediation relief
Enhanced corporation tax relief for qualifying costs of cleaning up contaminated or long-term derelict land acquired from a third party.
R&D for clean technology
R&D relief claims for qualifying projects developing low-carbon products and processes, prepared to HMRC's current standards. See R&D tax relief.
UK ETS and CBAM costs
Forecasting allowance purchases, free allocation and CBAM charges, and accounting for them correctly. See UK and EU CBAM.
Plastic, packaging and levies
Plastic Packaging Tax, packaging EPR fees, the Climate Change Levy and landfill tax reviewed together. See Plastic Packaging Tax and CBAM.
Green reliefs and carbon costs at a glance
| Item | Rule | Date |
|---|---|---|
| Zero-emission cars and EV charge points | 100% first-year allowance on qualifying new expenditure | To 31 March 2027 (corporation tax); 5 April 2027 (income tax) |
| Full expensing | 100% first-year allowance on new main-rate plant and machinery; 50% on special-rate assets (companies) | Permanent |
| New 40% first-year allowance | New main-rate plant and machinery not covered by other first-year allowances, including assets for leasing; companies and unincorporated businesses | From 1 January 2026 |
| Main-rate writing down allowance | Reduced from 18% to 14% | 1 April 2026 (corporation tax); 6 April 2026 (income tax) |
| Annual investment allowance | 100% relief up to £1m a year | Permanent |
| UK ETS: domestic maritime | Large vessels of 5,000 gross tonnage and above | From 1 July 2026 |
| UK ETS: waste incineration | Inclusion planned for 2028 has been postponed; new timeline to follow | Not yet set |
| Plastic Packaging Tax | Packaging with less than 30% recycled plastic | £228.82 per tonne from 1 April 2026 |
How we help
List planned green projects and current carbon costs.
After-tax cost of each option, including allowances and carbon prices.
Capital allowance analysis, R&D and land remediation claims.
Carbon costs and reliefs reflected in the accounts and disclosures.
A dedicated sustainability and ESG team
TaxDigit has a dedicated sustainability and ESG team, led by Dr Attieh Moezoddin, Head of Sustainability & ESG Advisory. Attieh holds a PhD in the Built Environment from the University of Salford and is a sustainable development researcher whose doctoral work built a framework for sustainable urban development using expert panels and multi-criteria analysis (fuzzy Delphi, fuzzy AHP and fuzzy TOPSIS) across social, environmental, economic and cultural pillars.
Finance, reporting and tax quality is reviewed by Amir Rafiei, Senior Manager for Global Tax Strategy, Transfer Pricing and Sustainability, who holds the 
ACCA Certificate in Sustainability for Finance. The team works side by side with our accounts, tax, payroll and international specialists, so your sustainability disclosures, financial statements and tax returns rest on one set of facts. Statutory audit is carried out separately by our alliance firm Jelveh Audit & Assurance.
- PhD, Built Environment
- Sustainable development research
- Materiality and expert panels
- SDGs and impact
- Climate risk and reporting
- ESG metrics and analytics
- IFRS S1, S2 and UK SRS
- CSRD and ESRS
- CBAM and green taxes
All sustainability and ESG services
See the full overview on our sustainability and ESG services page, or go straight to a related service. Large groups may also need our large and multinational group tax support.
Official sources
Rules, thresholds and dates on this page were checked against these sources on 14 November 2026. We re-check them whenever they change.
- First-year allowances for zero-emission cars and electric vehicle chargepoints (GOV.UK)
- 40% first-year allowance: HMRC Capital Allowances Manual CA23195
- Claim capital allowances: first-year allowances (GOV.UK)
- UK Emissions Trading Scheme: policy overview (GOV.UK)
- Plastic Packaging Tax (GOV.UK)
- Land remediation relief: HMRC Corporate Intangibles Research and Development Manual
Frequently asked questions
Can my company claim 100% tax relief on an electric car?
Yes, a 100% first-year allowance is available for new and unused zero-emission cars bought by 31 March 2027 for corporation tax, or 5 April 2027 for income tax, subject to the usual conditions.
Is there relief for installing EV charge points?
Yes. Qualifying plant or machinery for electric vehicle charge points attracts a 100% first-year allowance to the same dates.
What is full expensing?
A 100% first-year allowance for companies on qualifying new main-rate plant and machinery, with a 50% allowance for special-rate assets. It is permanent.
What is the new 40% first-year allowance?
From 1 January 2026, a 40% first-year allowance for new main-rate plant and machinery that does not already qualify for another first-year allowance, including most assets for leasing. It is available to companies and unincorporated businesses.
Who is in the UK ETS?
Power generation, energy-intensive industry and aviation, with domestic maritime added from 1 July 2026 for vessels of 5,000 gross tonnage and above. The planned 2028 inclusion of waste incineration has been postponed.
What is land remediation relief?
An enhanced corporation tax deduction for qualifying costs of cleaning up contaminated or long-term derelict land acquired from a third party.
What is the Plastic Packaging Tax rate?
£228.82 per tonne from 1 April 2026 for plastic packaging components with less than 30% recycled plastic, for businesses that manufacture or import 10 tonnes or more in 12 months.
Can green investment reduce our corporation tax?
Often, yes, through capital allowances, R&D relief and land remediation relief. The right timing and documentation make the difference.