Enhanced Capital Allowance: The Facts
Investing in energy saving technologies can be a daunting endeavour but businesses embracing highly efficient climate control systems can apply for government support to ease the strain of initial capital outlay. Managed by the Carbon Trust, Enhanced Capital Allowance (ECA) encourages investment in energy saving equipment.
What is Enhanced Capital Allowance (ECA)?
The ECA scheme provides businesses with accelerated tax relief for the investment in energy efficient plant or machinery specified on the Energy Technology List (ETL) as well as defined technologies where the category is included but where they are not specifically defined on the list but where claims can still be made. It allows 100% of the equipment cost to be written off against taxable profits in the year of purchase. ECA can be claimed on the cost of qualifying equipment, transportation as well as direct installation cost.
What are the benefits of capital allowances?
The ECA tax alleviation can boost cash flow and encourage the adoption of energy saving technologies that commonly carry a price premium over less efficient solutions. Through improved energy efficiency results, ECA compliant equipment can provide cuts in operating cost, lower energy bills and reduced climate change levy payments in the long term, far outweighing the higher initial purchasing cost. In other words, the ECA bridges the price premium to allow businesses to operate the most efficient solutions available.
What products are eligible for ECA?
Businesses investing in efficient energy technologies can check their chosen solution against the Energy Technology List (ETL). The ETL is a list of equipment that qualifies for the ECA, typically by meeting or exceeding energy efficiency standards, and is regularly reviewed to include the most energy efficient products available.
Recent changes to the ETL have placed the responsibility on manufacturers for certain product catagories to demonstrate compliance with ECA criteria. Therefore, purchasers and specifiers of HVAC solutions can browse for Daikin split, sky air and VRV systems and products that are not listed on the ETL here, or for listed status products such as chillers, controls, air to air heat exchangers and air curtains you can visit the DECC ETL website.