Enhanced capital allowance

The enhanced capital allowance scheme enables businesses to claim 100 per cent first-capital year allowances on investment in water-saving technology and products. The scheme is available to businesses that pay UK corporation tax or income take, and that have enough profits for the allowance to be written off against.

Key features of the scheme

Under the ECA Scheme all businesses which pay corporation or income tax will be able to claim 100% first year allowance on the purchase of selected water and energy saving products regardless of size, industrial or commercial sector or location.

What are Capital Allowances?

Capital Allowances allow the cost of capital assets such as our shower units and washroom facilities to be written off against businesses taxable profits. They take the place of depreciation charged in commercial accounts which is not allowed. The main rate of capital allowance for expenditure on most plant and machinery is 25% per year on a reducing balance.

What are Enhanced Capital Allowances?

First Year Capital Allowances (FYA) is the name given to specially increased rates of allowance. They are sometimes called Enhanced Capital Allowances (ECA). FYA allow a greater proportion of the cost of an investment to qualify for tax relief against businesses taxable profits of the period during which the investment is made and can provide a helpful cash flow boost. The ECA Scheme of water efficient technologies provides 100% FYA's for spending on designated equipment.

How much is the ECA worth to my business?

The benefit of ECA's is dependent on your business having sufficient profits for the allowance to be written off against and the rate at which your business pays tax.

Assuming that a business pays tax at 30% Corporation Tax rate in the year of investment:

• Capital Allowances at the generally available rate can reduce a tax bill by £7.50 for every £100 spent

• Enhanced Capital Allowance can reduce a tax bill by £30 for every £100 spent as all the tax relief is given up front

Which products are included on the ECA scheme?

All units that have ECA Water Technology Approved Logo are eligible for the Enhanced Capital Allowance Scheme.

You can claim the allowance when you buy any of the technologies or products that appear on the water technology list. These include

• monitoring equipment

• flow controllers

• leakage-detection equipment

• efficient toilets

• efficient taps

• rainwater-harvesting equipment

• cleaning in place equipment for process systems

• efficient showers

• efficient membrane-filtration systems for the treatment of wastewater for recovery and reuse

• efficient washing machines

• small-scale slurry and sludge dewatering equipment

• vehicle wash waste reclaim units

• efficient industrial cleaning equipment

• waste management for mechanical seals

• reuse and recovery systems

Manufacturers and suppliers that wish to include their products on the WTL must meet certain qualifying criteria. The WTL symbol can be used to promote products for sales and marketing purposes.

Where can I found out more?

You can find out more about Enhanced Capital Allowances and the Water Quality List by visiting the Enhanced Capital Allowances website

Envirowise operates the Rippleffect initiative which provides structured information and support to businesses in England to help them achieve water efficiency savings. To find our more visit the Envirowise website

 

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