Capital allowances for energy-saving equipment

Did you know that you can claim a 100% first-year allowance for expenditure on energy-saving equipment? Provided it meets certain conditions, you can write off the whole cost against your business profits in the year of purchase rather than over a period of years.

The enhanced allowance started in 2001 and its scope has widened since then. The plant and machinery must appear on the energy technology list, which now covers 16 qualifying technologies. They include boilers, refrigeration equipment, lighting, various types of heating equipment, combined heat and power, insulation, monitoring controls and others. The list specifies the strict energy-saving criteria that each type of equipment must meet.

The benefit to your business is not limited to the tax relief. You should save in energy costs and you will be able to show your customers and employees that you care about reducing carbon emissions and protecting the environment.

Businesses are also able to claim a 100% allowance for water-efficient equipment that reduces water use and improves water quality. The equipment must appear on the water technology criteria list. This includes items such as efficient toilets, taps and showers, monitoring equipment, flow controllers, rainwater harvesting equipment and filtration systems.

Details of the technologies and criteria for energy-saving and water-efficient equipment are available at www.eca.gov.uk. We can advise you on the full financial implications of the cost and installation of the equipment for your business, as well as the savings. We can also help you claim the enhanced allowances on your tax return.