Wednesday, 5 March 2014

Invest in LEDs and save £££ through the Enhanced Capital Allowance scheme

Enhanced Capital Allowances (ECAs) have been introduced as part of a nationwide scheme to reduce carbon emissions. This scheme allows businesses who invest in energy-saving technology to write off the total cost of said equipment against their taxable profit as a 100% first-year capital allowance. The scheme is managed and promoted by the government appointed Carbon Trust, who create and update the list of approved technologies. 

Although lighting is a non-listed product on the ECA scheme's technology list, individual products can qualify for ECAs if they meet a certain criterion. Tax relief can be claimed on the purchase and installation of LED lighting and LED controls. The scheme hopes to help reduce carbon emissions (which contribute to climate change) by encouraging businesses to invest more freely in new energy efficient technology. Your ECA claim can be made as part of your annual tax return and, at the discretion of your local tax office, you may be awarded tax relief for not only the cost of lighting but any other direct costs such as installation or transportation. 

With regards to lighting, the ECA scheme focuses on encouraging businesses to purchase equipment which automatically switches on and off or dims lighting, therefore saving energy. A number of lighting control categories are ECA eligible including both individual or combinations of; timer controls, presence detectors with associated switching controller, daylight detectors with associated switching and/or dimming controller and networked controls system. White light LED luminaires’ eligibility for ECA is mainly dependant on their light output efficiency; the criterion differs depending on the lighting application.

Several of our LED products, exceed the ECA criteria and qualify from the performance perspective. Although the high prices may be off putting at first, when considering the whole life cycle maintenance and operating costs of your lighting, opting for low cost non-LED lighting can prove to be false economy. The ECA scheme means that businesses can offset a significant part of the product and installation cost against taxable profits in the year of purchase, providing a cash flow boost and incentive to invest in energy saving LED equipment. 

Further information on this scheme is available from HMRC's website - www.eca.gov.uk/etl