The Government introduced the Enhanced Capital Allowance (ECA) scheme in 2001 to encourage businesses in areas such as Bradford and Sheffield, to invest in low carbon, energy-saving equipment. It is designed to help the UK reach its Kyoto target of reducing carbon emissions by 20%. The main cause of climate change is carbon emissions produced by burning fossil fuels. Around half of these come from businesses and industrial processes, so efforts to reduce emissions focus on these areas.
The scheme provides a tax incentive to businesses nationwide, that invest in equipment that meets published energy-saving criteria. The Energy Technology List (ETL) details the criteria for each type of technology, and lists those products in each category that
The ECA scheme can bring significant benefits in terms of immediate cash-flow and also a company’s energy efficiency and carbon footprint.
An immediate cash-flow boost
An ECA provides 100% tax relief on any investment in energy-saving equipment, in the same tax year as the purchase is made. This means a business in London or Nottingham, paying corporation tax at 28% will receive 28p tax relief for every £1 invested in energy-saving products.
Lower long-term energy costs
As well as the added tax incentive, investing in energy-saving equipment could reduce a company’s energy bills, as it has lower running costs. This will also reduce a company’s Climate Change Levy so there are significant long-term savings to be made from the initial investment. (see the graph below).
Information source – www.eca.gov.uk
If you would like to discuss how you could benefit from the ECA Scheme regarding your Air Conditioning System requirements, please Contact Us.
For further details regarding environmental regulation and air conditioning please see F-Gas Regulations page