Enhanced Capital Allowance

E C A enables your business to claim 100% tax relief on all qualifying investments within year one. This can deliver a substantial boost to cash flow and drastically reduce the payback on investment in energy saving equipment

Standard capital allowance for investment in plant permits 25% of the capital cost to be offset against tax in each year on a reducing basis. Of an £8000 investment £2000 could be offset in the first year, £1500 of the £6000 balance in year 2 and so on. But with ECA 100% of the cost can be offset in Year 1 giving a cash flow gain for further investment.

You can claim for equipment cost, installation cost, professional fees and building alteration costs.

Conventional Capital Allowance scheme

Year	Capital Balance	Tax Relief	Net Value @ 30% tax
1	£8,000	£2,000	£600
2	£6,000	£1,500	£450
3	£4,500	£1,125	£338
4	£3,375	£844	£253
5	£2,351	£633	£190
6	£1,888	£475	£142
7	£1,424	£356	£107
Total at end of Year 7		£6,933	£2,080

Enhanced Capital Allowance scheme

Year	Capital Balance	Tax Relief	Net Value @ 30% tax
1	£8,000	£2,000	£2,400
2 - 7	£0	£0	£0
Total at end of Year 7		£8,000	£2,400

The scheme now covers a wide range of categories:

boilers / pipe insulation / compressed air equipment

radiant / warm air heaters / power factor correction

heat pumps / motors / variable speed drives

lighting / refrigeration / thermal screens / CHP systems etc

'Eligible’ products will be placed on the UK Energy Technology List

This list is expected to be dynamic, with new technologies being added to the list as they are proven, and technologies being withdrawn from the list once they become ‘standard’ practice. For more information, contact the Environment and Energy Helpline, or visit the ECA web site www.eca.gov.uk.