Save Tax And The Environment

Expenditure on new energy efficient or water conserving plant & machinery ('ECAs') can attract a 100% deduction from profits.  ECAs include boilers, lighting, pipework insulation, refrigeration equipment and heaters where they meet particular energy efficiency criteria. 

Where significant capital expenditure is being incurred on a property it will be important to ensure that the ECA rules are considered upfront, ideally at the project design stage, to ensure that tax relief is maximised.

In addition to the potential tax benefits, ECAs could also assist in enhancing a property's energy efficiency rating and, particularly in view of current high utility costs, reduce running costs.  This could be a good marketing tool for selling a property and increasing the price obtained - particularly important in the current property market.

A further potential benefit of ECAs is that companies (not unincorporated businesses) can, subject to certain conditions being met, now surrender losses created by ECA claims, in return for a tax repayment from HMRC equal to 19% of the loss surrendered, up to a maximum repayment of £250,000.   

If you would like some further details on other capital allowance changes, please contact Jimmy Hair, Tax Partner, Springfords LLP on jhair@springfords.com