Cut costs with the Enhanced Capital Allowance scheme

The aim of the Enhanced Capital Allowance (ECA) scheme is to encourage adoption of low-energy and water-saving equipment and to reduce carbon emissions.

The Enhanced Capital Allowance (ECA) scheme is open to all businesses paying UK corporation or income tax and offers 100% first-year capital allowances on investments in new and unused energy-saving equipment.

A business paying corporation tax at 30% will receive 30p tax relief for every £1 invested in eligible energy saving equipment in the first year.

The boost to cash flow aims to offset higher purchase prices of energy-efficient plant and machinery while helping businesses to take advantage of lower ongoing energy bills.

In general, equipment installed must be selected from the regularly updated Energy Technology Product List (ETPL), compliant with criteria defined in the Energy Technology Criteria List (ETCL).

Through this the Government aims to promote the 10-25% most energy efficient products in the market.

However, lighting products are not specified in the ETPL because the market is rapidly evolving. The qualifying criteria for ECA acceptance are listed only in the ETCL. ECA-qualifying products are usually flagged and promoted by manufacturers.

Lighting

The ECA scheme has four lighting product categories:

Amenity, accent and display lighting
General interior lighting
Exterior area lighting
Exterior floodlighting

Lighting products covered by ECA

White LED lighting
White LED lighting units would comprise one or more white LEDs incorporated into luminaire with associated electronic control gear.

Lighting controls
Lighting controls that qualify are specifically designed to switch electric lighting on or off, and/or to dim output.

High Efficiency Lighting Units
HELUs consist of a light fitting with one or more lamps and control gear. LED lighting is not included in this category.

The costs of re-lamping existing light fittings or for integration in new light fittings are not covered by the ECA scheme. If a new lamp is used in an existing light fitting, this action is “making good”, effectively returning it to its prior state.

Separate lighting sub-components are not eligible for ECA as only complete, integrated and tested lighting units are covered. Also, emergency lighting does not qualify.

General lighting units installed indoors must comply with glare and angular exclusion zone recommendations (HSG 38, 1997).

Some associated costs incurred such as transport of equipment and some direct installation costs can also be claimed.

Water saving products

Water-saving equipment on the Water Technologies Product List includes efficient toilets (Propelair), showers and taps (hansgrohe, Grohe).

The Department of Environment Food & Rural Affairs reviews the lists of eligible water technologies and products each year.

Call us on 0333 123 5464 to find out how to maximise your capital allowances through energy and water-saving solutions.

Further information

Energy Technology List (ETL) 2017 https://www.gov.uk/guidance/energy-technology-list

Water Technology Criteria List https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/535275/water-technology-criteria-list-2016.pdf

Water Technology Product List https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/535274/water-technology-product-list-2016.pdf