Operators of both gas to grid and electrical Anaerobic Digestion (AD) plants are facing higher business rates after the UK Government changed the way it calculates the rates assessments which form the basis of rates bills, Handel Rating Consultants says its analysis shows.
The analysis by Handel Rating Consultants suggests the increase could be as much as 30% per annum for gas-to-grid plants and “at least” 20% for electrical combined heat and power (CHP) plants.
Handel Rating Consultants says the tax, business rates, is something almost every UK business has to pay with the charge being based on an estimate of the annual rental value of the premises.
The tax brings in some £26bn to HM Treasury, with the Valuation Office Agency (VOA), part of HM Revenue and Customs, being responsible for setting rateable values and local councils for collecting the tax, Handel Rating Consultants says.
The changes to business rates are a result of Chancellor Jeremy Hunt’s announcement that the revaluation of business rates will go ahead as planned from April 2023 – the new values were published following the Autumn Statement.
This increase in business rates for AD is adding yet more strain onto an industry that is already facing rising supply chain and feedstock costs.
The rise in the rates bills of AD operators mirrors the rises faced by most other renewable power generators including onshore wind and solar and will add tens of millions of pounds to the bills and risks harming “much-needed” investment, Handel Rating Consultants says.
Commenting on the analysis, Chairman of the Anaerobic Digestion and Bioresources Association (ADBA), Chris Huhne, said: “This increase in business rates for AD is adding yet more strain onto an industry that is already facing rising supply chain and feedstock costs.
“The prospect that rates could increase by up to 30% is a blow for the sector when government should be supporting home-grown production of green electricity and gas. AD products – biofertilisers and bioCO2 as well – increase energy security and help meet climate targets.”
St Nicholas Court Farms in Kent run two gas-to-grid AD plants which are fed on maize and rye silage. They have seen their combined Rateable Value increase from £144,000 in 2017 to £810,000 in 2023, Handel Rating Consultants says.
Owner Jim Pace, said: “Such increases hardly paint a picture of a government wanting to encourage investment in renewables. It feels much more that we are being penalised for showing an entrepreneurial spirit.
“It really is quite depressing and worrying at a time when all of the other inputs needed across the farm are going through the roof to be hit with a 400% increase in property tax.”