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How to benefit from enhanced tax relief through energy efficient equipment ?

Enhanced Capital Allowance

The Enhanced Capital Allowance (ECA) scheme is a key part of the Government’s program to manage climate change. It provides businesses with enhanced tax relief for investments in equipment that meets published energy-saving criteria, and is designed to encourage businesses to invest in energy-saving equipment.

What does the ECA Energy scheme involve?

The scheme provides a tax incentive to businesses that invest in equipment that meets published energy-saving criteria. The Energy Technology List (ETL) details the criteria for each type of technology, and lists those products in each category that meet them. It is managed by the Carbon Trust, on behalf of the Government, and has two parts:

The Energy Technology Criteria List (ETCL), which is reviewed annually to ensure that it reflects technological progress. It sets out the qualifying energy-saving criteria for each class of technology.

The Energy Technology Product List (ETPL), updated at the start of each month, lists the products and technologies that are eligible for an ECA.

Key Features of the ECA scheme:

Open to all businesses that pay UK corporation or income tax, regardless of size, sector or location.

Provides 100% first-year capital allowances on investments in energy-saving equipment against taxable profits in the period of investment.

All the products listed on the ETPL must meet the energy-saving criteria, published in the ETCL.

Only spending on new and unused energy-saving equipment can qualify for ECAs.

Capital allowances are available for spending “on the provision of” plant and machinery. This can include certain costs arising as a direct result of the installation of qualifying plant and machinery such as; transport of the equipment to the site, and some direct installation costs.

ECA’s are claimed in the business’s income tax or corporation tax return the same way as other capital allowances. The documentation you need to make an ECA claim depends on the type of energy-saving equipment purchased.

How do you claim an ECA?

ECA claims should be submitted as part of your normal corporation or income tax return, in the same way as other capital allowances. It’s important to retain all documents relating to your ECA claim, including invoices, dated screen prints from the ECA website to provide evidence of inclusion on the ETL, and anything from the company that installs the equipment.