The Climate Change Levy and Enhanced Capital Allowance Scheme (ECA)
To concur with the Kyoto Protocol, in 2001 the Government introduced an energy tax and an energy-efficiency incentives scheme to achieve a reduction in greenhouse gas emissions.
ECA Scheme
Under this scheme expenditure on technologies and products on the Energy Technologists List can qualify for 100% first year tax allowance.
These systems will provide highly efficient heating as well as cooling. The latest units are extremely efficient, reliable and economical to run.
ECA’s are claimed in the same way as other capital allowances on the Tax Return. Basic capital allowances are given at 25% of expenditure on a reducing balance.* Enhanced capital allowances are given at 100% of the expenditure in the first year.
The benefits of this scheme is a cash flow boost because you receive tax relief much earlier than would otherwise be the case. Air conditioning systems qualifying for an ECA are energy efficient and thus lead to long term financial benefits. By investing in energy efficient systems businesses can reduce their energy costs and climate change impact.
For residential installations on heat pump equipment the benefit is a VAT rate reduced to 5% from the current 17.5%
For a full list of equipment on the Energy Technologists List please visit www.eca.gov.uk
* Basic capital allowances for small businesses are currently 40% first year then 25% on reducing balance.
