Time’s running out…
So the targets have been set; we all need to hit net-zero by 2050 (or before) and make sure that our businesses are working towards hitting all of its sustainable goals whilst complying with each environmental policy that has been introduced.
For many this seems impossible as they don’t know where to start and have a budget which hangs over their head, telling them what they can and cannot do.
These types of challenges that businesses face have previously been recognised by the Government. Through this recognition they knew that something needed to be done about this; which is why they introduced an incentive for businesses to invest in high performance, energy efficient equipment through their ECA (Enhanced Capital Allowance) scheme.
In order to look at the options listed to be bought through this scheme, you will need to look at The Energy Technology and Water Technology List – link below:
To be listed the products must be reviewed by the ETL team and prove that they meet the energy efficient criteria; which means that the product would have to fall within the top 25% of energy efficient equipment for that specific category in the UK market.
So what does this mean for you?
Understandably, we know that sometimes it’s more convenient to purchase products or solutions at a lower cost (to fit in with your budget and to be a quick-win), however 9/10 this isn’t reliable and in the long-run really isn’t utilising your budget as efficiently as you may think…
For instance, if you purchase something at a lower cost, somewhere down the line parts may need to be updated and bought; or alternatively, the cost of energy used to run this product may continually increase, meaning you have spent a ton more than you originally planned or thought-out.
This is where one advantage is, in investing in energy efficient equipment; as due to the long-term savings in money and increased efficiency, you can already start to see a payback, sometimes in as little as 1-3 years (this all depends on the location and footfall).
Again, money being one advantage, but also the positive impact you will be having on the environment, due to a decrease in energy-use and increase in efficiency – which means your business has committed to a change which is ultimately helping towards combating climate change.
By investing in one of the listed technologies it will enable your business to claim 100% accelerated tax relief in the first year of purchase.
As stated in the Department for Business, Energy & Industrial Strategy’s ECA Scheme report:
‘There is no cap on the level of relief claimable for profit-making businesses. This means that businesses can immediately offset 100% of equipment purchase cost against their taxable profits, including any direct costs associated with installation and transportation of equipment.
ECA tax relief can work out between 5.5 and 12.5 times greater than ordinary capital allowances relief in the year of purchase. This accelerated cost saving further shortens the payback period and builds the business case for investment in energy efficient equipment’.
How do I claim Enhanced Capital Allowance?
It’s a lot easier than it may seem – just make sure that once you have made the purchase from one of the listed technologies you keep the supporting evidence and notify your business’s accountant (or advisor) of this, as they will be able to advise on how to proceed.
Once this has been done you may need to provide additional information, to which you will then be able to process your business tax return.
More information can be found at:
The ETL team can be contacted at ECAQuestions@carbontrust.com or on 0300 330 0657.
For tax enquiries relating to the ECA scheme, please contact HM Revenue & Customs at firstname.lastname@example.org.
The ECA scheme ends in April 2020 so there isn’t much time left to take advantage of this, so what better way of hitting your sustainable goals AND saving money than by investing in eco-friendly products.
Propelair can be found on the Water Technology List here:
Alternatively, if you would prefer to speak to one of our team about the process and what savings you could make, then please do not hesitate to call 01268 548 322 or email email@example.com.
Here’s to a sustainable 2020!
Department for Business, Energy & Industrial Strategy’s Energy Technology List & ECA Scheme guide