The ECA scheme means that a business can invest in energy-saving plant or machinery that might otherwise be too expensive.
The first year allowances let businesses set 100% of the cost of the assets against taxable profits in a single tax year. This means the company can write off the cost of the new plant or machinery against the business’s taxable profits in the financial year the purchase was made.
An ECA is claimed through a business’s income or corporation tax return in the same way as any other capital allowance. HM Revenue and Customs is responsible for the tax-related aspects of the ECA scheme.
The Enhanced Capital Allowance for energy and water efficient plant and machinery will end in April 2020.
There will also be a number of changes to update the ETL Criteria to reflect developments in eligible technologies. Subject to Parliamentary approval, these changes are expected to come into force in 2019. Further information will be provided on their site once an implementation date is confirmed.