In a bid to encourage increased use of renewable energy, the government has introduced a variety of financial incentives to businesses, including Enhanced Capital Allowances (ECAs) for certain green technology investments.
‘New energy’, as it is known, is going to have to become a mainstay of our domestic and professional lives if the government is to meet its agreed carbon reduction targets. Various measures have been announced to help make this vision of a low-carbon future a reality, including ‘sticks’ such as the Carbon Reduction Commitment, and ‘carrots’ such as Feed-in Tariffs and the Renewable Heat Initiative.
You may have heard of these schemes (indeed, you may have read our article on Feed-in Tariffs), but did you also know that certain green technologies qualify for Enhanced Capital Allowances (ECAs)? This allows businesses to write off the whole cost of the equipment against taxable profits in the year of purchase.
By investing in new energy-saving plant or machinery, you can not only benefit from lower energy bills, you may also be able to reduce your climate change levy payments, and depending on the technology, you might qualify to receive a tariff income. Add to that the tax benefits, and you have a very persuasive case for going green.
But not all tech is created equal – for an investment to qualify for the ECA, it must be listed on the Energy Technology Product List (ETPL). The ETPL includes boiler equipment, air to air energy recovery, combined heat and power (CHP), heat pumps, air conditioning, lighting, pipework insulation, refrigeration equipment and solar thermal systems, amongst others.
To find out more about claiming ECAs for energy-saving technology investments, please get in touch with our tax team.
