Enhanced Capital Allowances

In 2001 the Government introduced Enhanced Capital Allowance (ECA) to reward businesses that invest in energy saving equipment.

ECA’s are given on 100% of your expenditure in the first year. This means you can reduce the profits for the period of the investment on which you pay tax by 100% of the expenditure incurred when buying qualifying capital equipment.

Therefore on equipment costs of £10,000, your business will reduce its taxable profit by the full £10,000. That makes the first year saving from the ECA £3000, much greater than the standard capital allowance first year saving of only £750, a figure which goes on decreasing on the remaining balance for later years.

To find our more information and for a full list of equipment that qualifies on the ECA list please visit: www.eca.gov.uk