Enhanced Capital Allowances

Enhanced Capital AllowancesTax Relief for Businesses Investing in Technologies

Benefiting Water Use and Quality

www.eca-water.gov.uk

The ECA Scheme

• What is the Enhanced Capital Allowance (ECA) scheme designed to do?

• What are they worth to companies?• Which products and technologies can

qualify?• How to claim• How can you find out more about ECAs?


The ECA Scheme - Aims

To encourage businesses to invest in more sustainable technologies:

• Through providing fiscal incentive to users; and

• Through providing a marketing tool for manufacturers, thereby encouraging innovation


The ECA Scheme

ECAs provide:• Fiscal incentives to users designed to

encourage companies to choose water efficient and water quality enhancing products and technologies

• Tax relief on qualifying investments within one year, delivering significant cash flow boost and shortening the payback period on investment


The ECA Scheme

• Products and technologies qualifying for an ECA are listed on the Water Technology List and encourage sustainable water use

• They deliver significant long-term financial benefits – e.g. just by being water efficient - over and above the enhanced tax relief


How much of an incentive is it?

Assuming there are sufficient profits for the Capital Allowances to be written off against and a Corporation Tax rate of 30%:

•Capital Allowances are a benefit of £7.50 for every £100 spent•100% First Year Allowances (or ECAs) are benefit of £30 for every £100 spent •All allowances due in first year – positively affecting cash flow•Additional benefits over 10 years


How much is the enhanced tax benefit?

Year Expenditure written off against profits

Normal Rate (25%)

SMEs Rate (40% then 25%)

100% ECA

1 2 3 4 5 6 7 8 9 10

25.0 18.8 14.1 10.5 7.9 5.9 4.4 3.3 2.5 1.9

40.0 15.0 11.3 8.4 6.3 4.7 3.6 2.7 2.0 1.5

100 - - - - - - - - -


The Water Technology List

Details of qualifying products and technologies can be found on the Water Technology List, which is in two parts:

Water Technology Criteria List• Published in July 2003• Sets out the technologies and their specific criteria• Reviewed on an annual basisWater Technology Product List• To be published Autumn 2003• Lists all qualifying products on which the tax relief

can be claimed • Updated monthly www.eca-water.gov.uk


Specific qualifying products and technologies

• Meters and monitoring equipment• Flow controllers• Leakage detection equipment• Low flush toilets• Efficient taps• Rainwater Harvesting Equipment www.eca-water.gov.uk


How much can you claim?

• The price paid for a new product• Costs directly associated with the installation

of the kit • For more details see www.eca-water.gov.uk

or www.inlandrevenue.gov.uk

Claims can be made only for products appearing on the Water Technology List at the time of investment


How you claim

Claim your ECA as part of your normal income /corporation tax return calculations:


How to find out more

Visit the ECA web site:• Contains the Water Technology List• Provides contact details for manufacturers

and suppliers• Includes news, forthcoming events and

downloadable information» www.eca-water.gov.uk



Call the Environment and Energy Helpline for

• Free advice from experts• To order ECA publications• To find out about forthcoming ECA events

0800 58 57 94



Other people to ask:• Your environmental advisor • Your supplier / equipment installer

Is the equipment they are recommending on the Water Technology List?

• Your financial advisor


The Future

• Scope is being continually expanded – details of new products and technologies will be featured on the ECA web site

• Development of water quality enhancing technologies

• Information online on how to make Defra aware of technologies which could be considered for addition to the Water Technology Criteria Lists in the future


Other sources of useful information

www.defra.gov.uk

www.inlandrevenue.gov.uk

www.envirowise.gov.uk

Environment and Energy Helpline

0800 585794

Enhanced Capital Allowances

Documents

water quality

water efficient

enhanced tax

sustainable water usethey

eca schemewhat

sustainable technologies

ukthe eca schemeecas

ukthe eca schemeproducts