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In 2001 the Government introduced Enhanced Capital Allowance (ECA) to reward businesses that invest in energy saving equipment.
ECA’s are given on 100% of your expenditure in the first year. This means you can reduce the profits for the period of the investment on which you pay tax by 100% of the expenditure incurred when buying qualifying capital equipment. Therefore on equipment costs of £10,000, your business will reduce its taxable profit by the full £10,000. That makes the first year saving from the ECA £3000, much greater than the standard capital allowance first year saving of only £750, a figure which goes on decreasing on the remaining balance for later years.
To find our more information and for a full list of equipment that qualifies on the ECA list please visit: www.eca.gov.uk Quotation from the ECA website: - "Enhanced Capital Allowances (ECAs) enable a business to claim 100% first-year capital allowances on their spending on qualifying plant and machinery. There are three schemes for ECAs: -
Energy-saving plant and machinery -
Low carbon dioxide emission cars and natural gas and hydrogen refuelling infrastructure -
Water conservation plant and machinery
Businesses can write off the whole of the capital cost of their investment in these technologies against their taxable profits of the period during which they make the investment. This can deliver a helpful cash flow boost and a shortened payback period." |
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