Q-TON ELIGIBLE FOR UK ECA PLAN
The Mitsubishi Q-ton heat pump has been added to the Energy Technology List (ETL) since 1 July 2014. It is also admitted under the Enhanced Capital Allowance (ECA) scheme.
The ECA is an important element in the UK Government’s program to manage climate change. It offers companies the opportunity to benefit from tax relief through investments in equipment that meets the criteria required by the energy savings. The Enhanced Capital Allowance system offers companies the opportunity to request an allocation of capital in the first year. This allowance is around 100% on investments in certain energy saving equipment. It is deducted from the taxable income of the investment period.
Allowances are intended to amortize the cost of purchasing new equipment or facilities in the capital of companies. They benefit tax relief. The general rate of capital depreciation is 18% per year on a declining basis. Some technologies are supported by the ECA plan as boilers or lighting. Special rules apply when the general rate of capital allowances reaches 8%.
Taking the example of a company that spent £1,000 on a new electric motor that received a standard deduction for depreciation at the rate of 18% and pay 21% corporate tax, the tax relief would be £ 37.80 the first year. It can claim tax relief over the next few years. In case it invested in the purchase of a motor with higher efficiency on the list of energy technology, it may request an ECA. This application enables him to obtain a tax relief of 100%, a deduction of £ 210.
The purchase of ETL-listed offers several advantages such as improved cash flow, lower energy bills, reducing climate change.