Business rates for AD operators could rise 30%, ADBA warns

The Anaerobic Digestion and Bioresources Association (ADBA) warned last week, 15 December, that the additional costs put investment at risk.

This could also lead to food waste processing costs to increase if the additional business rate costs are passed on through the supply chain.

The changes to business rates, which are to come into effect from April 2023, were announced as part of the Autumn Statement which confirmed that the revaluation of business rates “will go ahead as planned”, ADBA said. It added that the new values were published shortly after.

The association referred to analysis by Handel Rating Consultants, which suggests that the increase “could be as much as 30% per annum for gas to grid plants and at least 20% of electrical combined heat and power (CHP) plants”.

Tax change

Business rates are something almost every UK business has to pay, with the charge based on an estimate of the annual rental value of the premises. The values of premises are being revaluated under the scheme. The Valuation Office Agency (VOA), part of HM Revenue and Customs, is responsible for setting rateable values, with local councils responsible for collecting the tax.

The association warned that the rise in the rates bills of AD operators “will add tens of millions of pounds to the bills and risks harming much needed investment”.

Anaerobic digestion is the most common disposal route for separately collected food waste. Gate fees are currently within the range of £-25 to 0 per tonne of material, with the negative number indicating that the recycler might be paying for the food waste in some cases. The extent of this rebate likely to be hit by the new measures.

‘More strain’

Chris Huhne, chair of ADBA, says: “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 increase energy security and help meet climate targets.”