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Enhanced Capital Allowances

Enhanced Capital Allowances. Tax Relief for Businesses Investing in Technologies Benefiting Water Use and Quality. The ECA scheme. What is the Enhanced Capital Allowance (ECA) scheme designed to do? What are ECAs worth to companies? Which products and technologies can qualify? How to claim?

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Enhanced Capital Allowances

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  1. Enhanced Capital Allowances Tax Relief for Businesses Investing in Technologies Benefiting Water Use and Quality

  2. The ECA scheme • What is the Enhanced Capital Allowance (ECA) scheme designed to do? • What are ECAs worth to companies? • Which products and technologies can qualify? • How to claim? • How can you find out more about ECAs?

  3. The ECA scheme - aims • To encourage businesses to invest in more sustainable water technologies • By providing fiscal incentive to users and • By providing a marketing tools for manufacturers, thereby encouraging innovation

  4. The ECA Scheme ECAs provide: • Fiscal incentives to users designed to encourage companies to choose water efficient and water quality enhancing products and technologies • Tax relief on qualifying investments within one year, delivering significant cash flow boost and shortening the payback period on investment

  5. The ECA scheme Products and systems qualifying for an ECA are listed on the Water Technology List and encourage sustainable water use They deliver significant long-term financial benefits – eg just by being water efficient – over and above the enhanced tax relief

  6. How Much of an Incentive Is It? Assuming there are sufficient profits for the Capital Allowances to be written off against and a Corporation Tax rate of 30%: • Capital Allowances are a benefit of £7.50 for every £100 spent • 100% First Year Allowances (or ECAs) are benefit of £30 for every £100 spent • All allowances due in first year – positively affecting cash flow • Additional benefits over 10 years

  7. How the Rates of Relief Compare

  8. The Water Technology List Details of qualifying products and technologies can be found on the Water Technology List, which is in two parts: • Water Technology Criteria List • Published in July 2003 • Sets out the technologies and their specific criteria • Reviewed on an annual basis • Water Technology Product List • Published Autumn 2003 • Lists all qualifying products on which the tax relief can be claimed • Updated monthly

  9. Specific Qualifying Products and Systems • Cleaning in place equipment • Efficient membrane filtration systems • Efficient showers • Efficient taps • Efficient toilets • Efficient washing machines • Flow controllers

  10. Specific Qualifying Products and Systems • Leakage detection equipment • Meters and monitoring equipment • Rainwater harvesting equipment • Small scale slurry and sludge dewatering equipment • Vehicle wash water reclaim units • Water efficient industrial cleaning equipment • Water management equipment for mechanical seals

  11. How Do Suppliers Get Their Products Listed? • Full Water Technology Criteria List available on the website • Online application process • Send supporting evidence to WTL • Takes about one month to process an application • Supplier will be informed if the product meets the criteria • Successful products will be published on the Water Technology List

  12. How Much Can Businesses Claim? • The price paid for a new product • The costs directly associated with the installation of the kit • For more details see www.eca-water.gov.uk or www.hmrc.gov.uk Claims can be made only for products appearing on the Water Technology List at the time of investment

  13. ECA Marketing Support The Government • Can’t overtly promote any specific products or technologies as qualifying for ECAs • But can promote the products and technologies on the Water Technology List as meeting the criteria to enable ECA claims

  14. ECA Marketing Support • The Water Technology List symbol • A new certified symbol for manufacturers to use to show that a product or technology is included in the Water Technology List • This will signal: • Approved sustainable water use performance/product differentiation • Water efficient performance/reduced water costs • Opportunity for end users to claim the tax benefits

  15. ECA Marketing Support • Marketing tools programme to manufacturers • To encourage you to use the WTL symbol to support sales development activities eg on literature, tenders, invoices • Marketing programme to Trade Associations • To encourage members to apply for/use the WTL symbol through product applications • Marketing programme for business advisors • To encourage end users to look for the WTL symbol when making procurement decisions

  16. ECA Marketing Support • Events • Designed to raise awareness of ECAs and the WTL symbol • Through trade associations and other stakeholder groups • Envirowise event programmes targeting • SMEs • Finance • Procurement • Boardroom

  17. The Future • Scope is being continually expanded – details of new products and technologies will be featured on the ECA website • Development of water quality enhancing technologies • Information online on how to make Defra aware of technologies which could be considered for addition to the Water Technology Criteria Lists in the future

  18. Other Sources of Useful Information www.defra.gov.uk www.hmrc.gov.uk www.envirowise.gov.uk Envirowise Advice Line 0800 585794

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