Tax Relief Scheme

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Enhanced capital allowance scheme 100% Tax Relief on Selected CWC Units

What is the ECA Scheme?

As part of the governments commitment to the Kyoto Agreement (World Wide          Reduction of Carbon Emissions), the then Chancellor of the Exchequer, Gordon Brown, in his 2001 Budget Report, announced support for business investment in environmentally friendly technologies.  This allowed for the introduction of a 100% First Year Enhanced Capital Allowance Scheme on water saving and water improving technologies.

The introduction of the ECA Scheme followed a number of representations from businesses such as ourselves proposing that the government should introduce tax incentives to encourage firms to invest in environmentally friendly products.  In designing the scheme for enhanced capital allowance the then government drew on the model operating successfully in the Netherlands.

The Water Technology List first published in July 2003 includes products that have met stringent criteria regarding water conservation and safety. 

Key Features of the Scheme

Under the ECA Scheme all businesses that pay corporation or income tax will be able to claim 100% first year allowance on the purchase of selected CWC water & energy saving products regardless of size, industrial or commercial sector or location. ECA Allowances are not only acailable on the capital cost of the CWC equipment but also on installation and delivery costs of the equipment.

What are Capital Allowances?

Capital Allowances allow the cost of capital assets such as our shower kits to be written off against a 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 a 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 such as our shower mixer kits.

How Much is the ECA Worth to my Business?

The benefit of ECA's is dependant 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 CWC Products are Included on the ECA Scheme?

All units that have ECA Water Technology Approved Logo are eligable for the Enhanced Capital Allowance Scheme.  As we are adding units to the scheme on a regular basis keep visiting our website for updates.

What If My Company Is Not Making Taxable Profits and Cannot Make use of the Capital Allowances?


From 1st April 2008 under the Payable Enhanced Capital Allowance loss making companies can surrender the value of their ECAs for cash payments or credit from the Government calculated at 19% of the value of the ECA surrendered. This tax credit is claimed on the companies tax return and will be repaid by the taxman as soon as the return has been processed.



Example


A company spends £750,000 after April 1st 2008 on qualifying equipment. It claims a 100% ECA of £75,000. For the companies year ending March 31st 2009, it makes an adjusted loss of £200,000(after deduction of ECA) and surrenders the ECA of £75,000 for a cash payment of £14250 (19%of £75,000).


Annual Investment Allowance (AIA)


The AIA provides an annual 100% allowance for the first £50,000 of investment in plant and machinery (except cars) to all businesses. This will help small businesses but is being offset by the withdrawal of first year allowances for small and medium firms.
One concession is that the proposed legislation will allow the AIA to be allocated against any pool of qualifying expenditure. It can therefore can be offset against the lower rates of relief in the form of Long Life assets and Integral features to preserve the higher 20% and 100% relief’s which will provide a NPV benefit.
This may also help many small firms administratively as it could mean there is no need for a Long Life asset or Integral features pool and no need to transfer assets from the FYA pool to the general plant and machinery pool.

"With over 19,000 products available we can show only a fraction on this web site.  If you are looking for a particular product or application and cannot find it please contact us Prese Herewith your requirements"

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