ECA - Financial Benefits
What is ECA?
The Enhanced Capital Allowances (ECA) scheme was introduced by the Government in April 2001 in parallel with the Climate Control Levy (CCL). The CCL imposes a levy on energy tariffs for businesses (excluding very small businesses), while the ECA scheme enables these businesses to reclaim the tax if they invest in energy efficient equipment.
These two initiatives form part of the Government’s strategy for reducing carbon dioxide emissions and global warming in keeping with the UK’s commitment to the Kyoto Protocol.
The ECA scheme is managed by the Carbon Trust, for the Government in collaboration with the Department for Environment, Food and Rural Affairs (DEFRA) and the Inland Revenue.
How do ECA's work?
Enhanced Capital Allowances are used to encourage businesses to invest in particular types of equipment by providing up front tax relief as 100% of the allowances can be reclaimed in the first year.
ECA’s and energy in buildings
In order to ensure that ECA’s are only claimable against energy efficient equipment, the Carbon Trust has drawn up a list of approved technology categories which form the Energy Technology List. The Energy Technology list details over 6000 products that meet the Government’s energy efficiency criteria offering end users the following benefits:-
- Energy efficiency resulting in significant long-term financial benefits
- Enhanced tax relief
- Boosted cash flow
- Faster payback on investment
- Reduced energy costs resulting in lower cost of ownership
- Improved environmental performance for business
- Reduced environmental impact
The Inland Revenue's guidance on the ECA system can be found at: www.eca.gov.uk
