Businesses must get to grips with ECA
Buderus is driving a call to action with the Carbon Trust to encourage more businesses to take advantage of the Enhanced Capital Allowance (ECA) initiative.
The Government introduced the ECA scheme in 2001 to encourage businesses to invest in low carbon, energy-saving equipment. As part of the Climate Change Levy Programme, it is designed to help the UK reach its Kyoto target of reducing carbon emissions by 20%.
The scheme provides a tax incentive to businesses 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 meet them. It is managed by the Carbon Trust, on behalf of the Government, and is open to all businesses that pay UK corporation or income tax, regardless of size, sector or location.
Richard Evans, Director of Sales for Buderus, said of the scheme: “With a lot of other energy led Government schemes up in the air at the moment, the ECA offers genuine support to businesses looking to improve their environmental credentials. The Carbon Trust is delivering an excellent, well run scheme, which a lot of companies simply aren’t taking advantage of. Larger companies affected by the Carbon Reduction Commitment (CRC) should definitely be looking to see how the ECA scheme can help them.
“We recently encouraged contractors MW Kellogg to look into the ECA scheme when we began working with them to deliver a new heating system. As a result, MW Kellogg was able to reduce fuel costs, reduce their carbon emissions and free-up working capital, after actioning a very simple application process.”
Enhanced Capital Allowances enable a business to claim 100% first-year capital allowances on their spending on qualifying plant and machinery. This can deliver a helpful cash flow boost and a shortened payback period. There are three schemes for ECAs, which cover energy saving plant and machinery, low carbon dioxide emission cars and natural gas and hydrogen refuelling infrastructure and finally water conservation plant and machinery
Paul Huggins, Head of Enhanced Capital Allowances (ECAs), at the Carbon Trust, said: “Cash is king in every business – and every business is eligible for 100% tax relief on energy efficient equipment replacements through the Enhanced Capital Allowance (ECA) scheme. As businesses seek to ensure profitable growth during this time of weak recovery, they must look for opportunities to invest in their future productivity and efficiency. The ECA scheme provides just that – a qualified list of energy saving equipment, and the ability to write off its cost against taxable profits so firms can save money, whilst keeping cash in the business.”