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  • Features & Benefits

enhanced capital allowance scheme 100% Tax Relief on Selected CWC Units

What is the ECA Scheme?

As part of the governments commitment to the Kyoto Agreement (World Wide Reduction of Carbon Emissions), the Chancellor of the Exchequer, Gordon Brown, in his 2001 Budget Report, announced support for business investment in environmentally friendly technologies.  This allowed for the introduction of a 100% First Year Enhanced Capital Allowance Scheme on water saving and water improving technologies.

The introduction of the ECA Scheme followed a number of representations from businesses such as ourselves proposing that the government should introduce tax incentives to encourage firms to invest in environmentally friendly products.  In designing the scheme for enhanced capital allowance the government drew on the model operating successfully in the Netherlands.

The Water Technology List published in July 2003 includes products that have met stringent criteria regarding water conservation and safety.  Challis Water Controls currently have one tap aerator product listed on the scheme however after a great deal of lobbying inclusion of our water saving shower heads and thermostatic/pressure balanced mixing valves has now been agreed and as such all these units will be eligable from October 2005.

Key Features of the Scheme

Under the ECA Scheme all businesses that pay corporation or income tax will be able to claim 100% first year allowance on the purchase of selected CWC water & energy saving products regardless of size, industrial or commercial sector or location. ECA Allowances are not only acailable on the capital cost of the CWC equipment but also on installation and delivery costs of the equipment.

What are Capital Allowances?

Capital Allowances allow the cost of capital assets such as our shower kits to be written off against a businesses taxable profits.  They take the place of depreciation charged in commercial accounts which is not allowed.  The main rate of capital allowance for expenditure on most plant and machinery is 25% per year on a reducing balance.

What are Enhanced Capital Allowances?

First Year Capital Allowances (FYA) is the name given to specially increased rates of allowance.  They are sometimes called Enhanced Capital Allowances (ECA).  FYA allow a greater proportion of the cost of an investment to qualify for tax relief against a businesses taxable profits of the period during which the investment is made and can provide a helpful cash flow boost.  The ECA Scheme of water efficient technologies provides 100% FYA's for spending on designated equipment such as our shower mixer kits.

How Much is the ECA Worth to my Business?

The benefit of ECA's is dependant on your business having sufficient profits for the allowance to be written off against and the rate at which your business pays tax.  Assuming that a business pays tax at 30% Corporation Tax rate in the year of investment.

• Capital Allowances at the generally available rate can reduce a tax bill by £7.50 for every £100 spent
• Enhanced Capital Allowance can reduce a tax bill by £30 for every £100 spent as all the tax relief is given up front

Which CWC Products are Included on the ECA Scheme?

All units that have ECA Water Technology Approved Logo are eligable for the Enhanced Capital Allowance Scheme.  As we are adding units to the scheme on a regular basis keep visiting our website for updates.