The Enhance Capital Allowance (ECA) scheme is a key part of the Government’s programme to manage climate change. It provides businesses with enhanced tax relief for investments in equipment that meets published energy-saving criteria.

The Government introduced the ECA scheme in 2001 to encourage businesses to invest in low carbon, energy-saving equipment. As part of the Climate Change Levy Programme, it’s designed to help the UK reach its Kyoto target of reducing carbon emissions by 20%.

The scheme enables businesses to claim 100% first-year capital allowance on investments in energy-saving equipment, against the taxable profits of the period of investment.

Enhanced Capital Allowances (ECAs) can only be claimed on energy-saving products that meet the relevant criteria for their particular technology group – as detailed on the Energy Technology Criteria List (ETCL).

ETC equipment is included on the ETCL and is therefore qualifies companies to claim under the ECA scheme.

The cost claimable for ECA is not limited to the equipment itself but extends to include transportation costs to site, installation costs, project management cost, professional fees, labour costs and costs associated with modifying equipment to accept the energy saving technology.

The associated costs will often far exceed the cost of the listed equipment; this makes any proposition far more attractive to the end-user.