The Enhanced Capital Allowance (ECA) Scheme is a key part of the Government’s programme to manage climate change. The scheme offers tax incentives to encourage businesses to invest in energy saving plant or machinery.

How does ECA work?

The ECA scheme enables businesses to claim a 100% first year capital allowance on investments in certain energy saving equipment, against the taxable profits of the period of investment.

Capital allowances enable businesses to write off the capital cost of purchasing new plant or machinery including variable speed drives against their taxable profits. For example:

If a business spent £1000 on a new variable speed drive, claimed a standard capital allowance at the 18% rate and paid 24% corporation tax then the tax relief would be £43.20 in the first year. Further tax relief could be claimed in subsequent years. Provided they used a product from the Energy Technology List then it could claim an Enhanced Capital Allowance, giving a one-off 100% tax relief of £240.

Energy Technology List is produced by government including the Department of Energy and Climate Change and regularly updated for qualifying products.  999 Inverters’ drives suppliers including ABB, IMO, Mitsubishi, Omron and Schneider are all included in the approved list.

Additional benefits of purchasing ECA qualifying energy efficient technologies could include: improved cash flow, lower energy bills, reduction in Climate Change Levy or CRC payment.

Further information on the benefits of capital allowances are given in ECA 272 – The Enhanced Capital Allowances scheme (PDF, 2MB).

For more information on capital allowances, please see HMRC’s page on tax relief for capital allowances

– which products are eligible for ECAs
– frequently asked questions
– how to claim enhanced tax relief

Go here for our ECA compliant inverter drives