The Enhanced
Capital Allowance (ECA) scheme is a key part of the Government's
programme to manage climate
change, and is designed to encourage businesses to invest in
energy-saving equipment.
Why was it introduced?
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's designed
to help the UK reach its Kyoto target of reducing carbon emissions
by 20%.
Climate change is becoming one of the biggest threats to our
planet's environment, and the biggest cause of this is
carbon emissions produced by burning fossil fuels. Around half
of these come from businesses and industrial processes, so it's
important that efforts to reduce emissions focus on these areas.
There are three ECA schemes which provide enhanced tax relief
for spending on equipment which has environmental benefits: energy-saving
equipment, water-efficient equipment and low carbon dioxide emission
cars. This website focuses on energy-saving products and technologies.
What does the ECA Energy scheme involve?
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 has two parts:
- The Energy Technology Criteria List (ETCL), which
is reviewed annually as part of to ensure that it reflects
technological progress. It sets out the qualifying energy-saving
criteria for each class of technology. See
how the energy-svaing criteria have changed over the years.
- The Energy Technology Product List (ETPL), updated
at the start of each month on this website, lists the products
and technologies that are eligible for an ECA.
The ETPL also contains details of the maximum
claim
values for qualifying products which comprise a component in
a larger piece of plant and machinery, whch does not itself qualify
for ECAs.
Key Features of the ECA scheme
- Open to all businesses that pay UK corporation or income
tax, regardless of size, sector or location.
- Provides 100% first-year capital allowances on investments
in energy-saving equipment against taxable profits of the period
of investment.
- All the products listed on the ETPL must meet the energy-saving
criteria, published in the ETCL.
- Only spending on new and unused energy-saving equipment can
qualify for ECAs.
- Capital allowances are available for spending “on the
provision of” plant and machinery. This can include certain
costs arising as a direct result of the installation of qualifying
plant and machinery such as; transport of the equipment to
the site, and some direct installation costs. Please refer
to the Claiming an ECA section
for more information.
Visit the
ECA website to find out more »
