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Enhanced Capital Allowance (ECA) energy scheme

The Enhanced Capital Allowance (ECA) energy scheme provides tax allowances for energy saving products. The ECA energy scheme supports a variety of energy saving technologies, which include:

  • heating, ventilation and air conditioning (HVAC) equipment – including HVAC zone controls and close control air conditioning
  • refrigeration equipment – including air-cooled condensing units, cellar cooling equipment, automatic air purgers, and refrigerated display cabinets and fittings
  • heat pumps for space heating – including air source, water source and ground source

First Year Allowance

The ECA energy scheme lets your business claim 100 per cent First-Year Allowance (FYA) relief on investments in qualifying technologies and products. This means you can write off, for example, the whole cost – or up to the published claim value – of buying the energy-saving product against your taxable profits in the year of purchase.

ECAs bring forward tax relief, so that you can set it against profits from a period earlier than would otherwise be the case. This could save you a lot of money, as well as reduce your business’ energy use, carbon footprint and climate change levy payments.

Using energy-saving equipment will help reduce your energy bills, saving your business considerable sums of money in the long term.

Claiming ECA tax relief will save your business even more money, improving your cashflow for the year that you invest in the new equipment. And using the equipment itself will help reduce the impact your business has on the environment

Only new equipment is eligible for an ECA, used or second-hand equipment does not qualify. Eligible equipment, and the criteria they have to meet, is published in the Energy Technology List. The criteria are reviewed annually to keep pace with technological progress.

How to Claim

You should claim ECAs for energy saving equipment in the same way that you claim other FYA. This is through your Self-Assessment Tax Return or your Corporation Tax Return. If you need help making your claim for ECAs, you should contact your tax adviser or call the HM Revenue & Customs (HMRC) Self Assessment Helpline.

If you would like more information, you can find out more on the first year allowances for energy saving products page of the HMRC website.


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