UK biogas plants could face higher taxes as government shifts policy

In the UK, operators of both gas to grid and electrical anaerobic digestion plants are facing higher business rates after the UK government changed the way it calculates the rates assessments which forms the basis of rates bills. Analysis by Handel Rating Consultants – a leading expert specialising in the sector 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.

Many of these plants are operated by farmers – already facing steep rises in costs and bruised by inconsistent government policies. Recent data says there are now 702 anaerobic digestion sites in the UK, mostly located on farms. The Government is continuing to support gas to grid plants and has ambitious targets to more than double capacity by 2030.

The tax in question, 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. There are more facts at the bottom of this press release.

The changes to business rates have come about following the Chancellor’s announcement last week that the revaluation of business rates will go ahead as planned from April 2023. The new values were published following the Autumn Statement.

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.