Enhanced Capital Allowance
The Department of Energy and Climate Change have introduced a new scheme named the Enhanced Capital Allowance (ECA). This scheme enables any business paying company tax to claim 100% back on their investments in energy saving equipment in the first year, providing that the equipment purchased is included in the scheme. If a product is listed on the Energy Technology List (ETL) then you will be eligible for the ECA scheme.
How can the ECA benefit me?
The ECA scheme allows a business to write off the cost of their ECA approved equipment against the taxable profits of their company. Not only could you be eligible to claim on your purchases but there are also many other hidden benefits for investing in ECA qualifying products.
- Increased energy efficiency
- Reduced energy bills
- Increased money saving options
- Reduced operating costs
How can I claim my ECA?
If you have purchased a product that is currently itemised on the ETL, then your claim will be calculated by the value shown on your invoice. Your accountant can handle your claim, alternatively full information can be found online at the HMRC website.
What products are contained on the ETL and which items can I claim ECA on?
There are currently around 13,000 products listed on the ETL, covering a wide range of sectors all of which are eligible for the ECA scheme. Many manufacturers who have listed their products on the ETL are available via the FFD website. These manufacturers include;
All of these brand names have multiple models from their ranges included in the scheme. When browsing our products look out for the ‘ECA Approved’ sticker on eligible products.
What can I claim?
Providing that you are paying company tax you are entitled to claim 100% of the tax back in the first year. Usually you will only be able to deduct a certain portion of the installation cost during the 10 years following your purchase.
Depending on the product you have purchased, you may also be eligible for an interest free loan from the Carbon Trust in order to fund your equipment. To find out more about the Carbon Trust visit their website for more information.
How much can I save with the ECA scheme by purchasing products that are listed on the ETL?
The easiest way to demonstrate the savings you could make is to set an example;
- If your company pays 24% income or corporation tax and you purchase a qualifying unit of equipment at the cost of £10,000, you will receive a reduction in your tax bill from £2,400 to £1,968. This saves you £432.
Loss making companies can also, now take advantage of the ECA scheme. If purchasing an item of equipment listed on the ETL, instead of reducing your tax bill yearly in accordance with natural depreciation, the product will be deducted from your tax bill in one total amount.
The ETL is constantly being updated with new items. These will usually appear on the list at the beginning of every month. If you purchase a piece of equipment that did feature on the list but is no longer itemised you will be unable to take advantage of the ECA. Likewise, if you purchase an item not on the list and then it is added at a later date, you will be unable to claim any tax return against the equipment. Only items currently on the list can be claimed against. Before purchasing any equipment with the hope of reaping the benefits of the ECA scheme it is always advisable to cross reference your intended purchase with an updated version of the ETL.
All businesses are becoming more environmentally aware and are seeking out products which offer improved energy efficiency. This scheme promotes and encourages people to take the final leap and transfer all of their eligible equipment over to these more environmentally aware products.