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Enhanced Capital Allowances. Tax Relief for Businesses Investing in Technologies Benefiting Water Use and Quality. 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 - PowerPoint PPT Presentation
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Enhanced Capital Allowances
Tax 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?
www.eca-water.gov.uk
The ECA Scheme - Aims
•To encourage businesses to invest in more sustainable water technologies
•By providing fiscal incentive to users and
•By providing a marketing tool for manufacturers, thereby encouraging innovation
www.eca-water.gov.uk
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
www.eca-water.gov.uk
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
www.eca-water.gov.uk
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
www.eca-water.gov.uk
How the rates of relief compare
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 - - - - - - - - -
www.eca-water.gov.uk
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 basis
–Water Technology Product List• 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• Efficient toilets• Efficient taps• Rainwater Harvesting Equipment
www.eca-water.gov.uk
How do suppliers get their products listed?
• Full Water Technology Criteria List is available on the website
• Online application process• Send supporting evidence to Defra• Takes about 1 month to process an application• Supplier will be informed if the product meets
the criteria• Successful products will be published on the
Water Technology List
www.eca-water.gov.uk
How much can businesses 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
www.eca-water.gov.uk
ECA Marketing Support
The Government• Can’t overtly promote any specific products or
technologies as qualifying for ECAs• But can promote the products and
technologies on the Water Technology List as meeting the criteria to enable ECA claims
www.eca-water.gov.uk
ECA Marketing Support
• The Water Technology List symbol– A new symbol for manufacturers to use to
signal that a product or technology is included on the Water Technology List.
• This will signal:– Approved sustainable water use
performance/product differentiation – Water efficient performance/ reduced water
costs– Opportunity for end users to claim the tax
benefits
www.eca-water.gov.uk
ECA Marketing Support
• Marketing programme to manufacturers– To encourage you to use the WTL symbol to
support sales development activities e.g. on literature, tenders, invoices
• Marketing programme to Trade Associations– To encourage members to apply for/use the
WTL symbol• Marketing programme for business advisors
– To encourage end users to look for the WTL symbol when making procurement decisions
www.eca-water.gov.uk
ECA Marketing Support
• Events– Designed to raise awareness of ECAs and
the WTL symbol– Through trade associations– Envirowise event programmes targeting
• SMEs• Finance• Procurement• Boardroom
www.eca-water.gov.uk
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
www.eca-water.gov.uk
Other sources of Useful Information
www.envirowise.gov.uk
www.defra.gov.uk
www.inlandrevenue.gov.uk
Environment and Energy Helpline
0800 585794