Enhanced Capital Allowances are available on installation of Interseasonal Heat Transfer

Organisations subject to corporation tax or income tax can benefit from Enhanced Capital Allowances (ECAs) on installing Interseasonal Heat Transfer and other energy-saving equipment specified on the Energy Technology List (ETL). The ETL is managed by the Carbon Trust on behalf of Government. ECAs are a form of accelerated Capital Allowances that confer large cashflow advantages to tax paying organisations when energy efficient plant is installed, including some ground source heat pumps and solar thermal systems.

The ECA scheme provides businesses with 100% first year tax relief on their qualifying capital expenditure. The ETL specifies the energy-saving technologies that are included in the ECA scheme. The scheme allows businesses to write off the whole cost of the equipment against taxable profits in the year of purchase. This provides a cash flow boost and an incentive to invest in energy-saving equipment which normally carries a price premium when compared to less efficient alternatives.

If your business pays corporation tax at 28%, every £10,000 spent on qualifying equipment will reduce the tax bill in the year of purchase by £2,800. In contrast, for every £10,000 spent, the generally available capital allowance for spending on plant and machinery would reduce your business' tax bill in the year of purchase by £560.

In other words, an ECA can provide a cashflow boost of £2,240 for every £10,000 it spends in the year of purchase.

Enhanced Capital Allowances – 2012 Budget update

From April 2012, those claiming Feed in Tariffs or Renewable Heat Incentive will no longer be able to claim Enhanced Capital Allowances on the cost of equipment which generates electricity or heat.

Renewable Heat Incentives are available on installation of Interseasonal Heat Transfer

Organisations acquiring new IHT systems for non-domestic buildings are eligible to receive Renewable Heat Incentive for the metered use of ground source energy and for heat generated by solar thermal systems for domestic hot water. The remaining heat generated by solar thermal systems is used in IHT systems to boost the temperature of the thermalbank: this greatly improves the efficiency of ground source energy for space heating in winter.