The Enhanced Capital Allowance (ECA) scheme is a key part of the Government’s programme to manage climate change, and is designed to encourage businesses to invest in energy-saving equipment.

Why was it introduced?

The Government introduced the ECA scheme to encourage businesses to invest in low carbon, energy-saving equipment. As part of the Climate Change Levy Programme, it’s designed to help the UK reach its Kyoto target of reducing carbon emissions by 20%. Climate change is becoming one of the biggest threats to our planet’s environment, and the biggest cause of this is carbon emissions produced by burning fossil fuels. Around half of these come from businesses and industrial processes, so it’s important that efforts to reduce emissions focus on these areas.

Key Features of the ECA scheme

• Open to all businesses that pay UK corporation or income tax, regardless of size, sector or location.
• Provides 100% first-year capital allowances on investments in energy-saving equipment against
  taxable profits of the period of investment.
• All the products listed on the ETPL must meet the energy-saving criteria, published in the ETCL.
• Only spending on new and unused energy-saving equipment can qualify for ECAs.