Taking Account

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  • Taking Account

Energy efficient plant - tax credits

December 2007

It has been possible to claim 100% enhanced capital allowances (ECA's) for the purchase of certain energy efficient plant, since 2001.

It has now been proposed that this allowance be extended so that companies who cannot get an immediate cash flow benefit, if for instance they are making losses and paying no tax, be allowed to surrender the 100% allowance for a cash payment from the Government. Details of the claim process have yet to be formalised; clients will be advised as soon as they are made available.

However companies should take this into account when planning future purchases of qualifying plant. Readers may find the following notes useful:

  • The tax credit system will be broadly based on the present research and development tax credit for small and medium sized enterprise.
  • Companies would be allowed to surrender the part of their trading losses attributable to ECA's.
  • At present the scheme would be limited to companies.
  • Cars with low carbon emissions that presently qualify for the 100% ECA will be excluded from the payable tax credit arrangement.

Hilton Sharp & Clarke