WHAT is the ECA?
It’s explained on the Department of Energy and Climate Change (DECC) website
www.gov.uk/decc
The Enhanced Capital Allowance (ECA) scheme enables businesses to claim a 100% first year capital allowance on investments in certain energy-saving equipment, listed on the Energy Technology List (ETL), against the taxable profits of the period of investment.
That compares to the general rate of capital allowances of 18% a year on a reducing balance basis. Some technologies are included in a special capital allowances pool where the general rate of capital allowances is 8%.
The site gives an example of a business installing a new electric motor under standard capital allowances where the business would see tax relief in the first year of £41.40 with the opportunity to claim further relief in subsequent years.
By investing in a more efficient motor listed on the ETL it could claim an Enhanced Capital Allowance, giving a one-off 100% tax relief of £230 and could also see lower running costs.
