Enhanced Capital Allowances
1. Why have Enhanced Capital Allowances been Introduced ?
To offer business an effective means of neutralising the impact of the Climate Change Levy (a business tax on the use of energy sources) introduced in 2001 with an incentive to adopt a more environmentally conscious approach when deploying energy resources.
2. What financial benefits are derived by claiming ECA’s?
- 100% capital allowances in the first year, including the costs of installation.
- Improved cash flow.
- Taxation reduced in the first year.
- Improved profit after tax.
3. Does warm air and radiant space heating qualify for ECA’s?
Yes, as of August 2002 high efficiency warm air and radiant heating systems are included as long as they meet the necessary efficiency criteria, and have been independently verified by an approved body.
4. What is the inclusion threshold for radiant heating?
- Individually flued (or unflued) systems that achieve a net thermal efficiency of 86%.
- And in addition have a radiant efficiency of 60%.
- Multiburner or continuous systems that achieve a net thermal efficiency of 90%.
5. What is the inclusion threshold for warm air heating?
All units must have a minimum net thermal efficiency of 91%.
6. What impact will ECAs have on purchasing capital equipment?
Quite simply buying energy efficient systems will now cost less than standard efficiency options.
| Standard Efficiency Equipment | High Efficiency Equipment | |
| Capital cost (inc installation) |
£ 37,250 |
£ 44,000 |
| Fuel costs | £ 15,900 |
£ 14,700 |
| Climate Change Levy | £ 1,988 |
£ 1,838 |
| Less Capital Allowance | £ 2,800 | £ 13,200* |
| TOTAL | £52,338 | £47,338 |
Notes
Fuel costs based on 1600 hrs per annum.
Fuel cost used for illustration 1.2p/kW.
Installation costs from actual data.
Based on Corporation Tax rate of 30%
* 100% capital allowance to be claimed in the first year including the costs of installation.
7. What Benson Heating products qualify for ECA? (subject to final verification by The Carbon Trust)
- Gas & oil fired cabinet heaters
- PV cabinet heaters
- Variante warm air unit heaters
- OUH oil fired unit heaters
- Vision radiant tube heating system
8. Where is more information available on CCL programmes and ECA’s?
Environment and Energy Helpline 0800 585794 www.actionenergy.org.uk
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