Enhanced Capital Allowances

What is an Enhanced Capital Allowance (ECA)?

The Enhanced Capital Allowance is the Government’s scheme providing enhanced tax relief on equipment with environmental benefits.

Why was it introduced?

Around half of the carbon emissions come from businesses and industrial processes. The scheme was introduced to encourage businesses to invest in low-carbon, energy saving and water efficient equipment to assist in achieving the UK’s carbon targets and a broader aim of climate change mitigation. 

How does it work?

The Government's Enhanced Capital Allowance (ECA) scheme allows businesses to write down 100 % of the cost against taxable profits on qualifying plant and machinery in the year of purchase. The allowance is claimed, as with any regular capital allowance, in the end of year corportate tax return.

There are three main areas of qualifying expenditure:

  • Energy saving plant and machinery
  • Low emission cars and gas and hydrogen refueling infrastructure 
  • Water conservation plant and machinery

The scheme also covers all other costs, directly associated with the installation of equipment, including transportation and installation costs and professional fees related to acquisition and installation of eligible equipment.

Energy Saving Plant and Machinery

There are 14 technologies and 53 sub technologies, that qualify for the ECA scheme, which include energy recovery, automatic monitoring and targeting, boilers, heat pumps for space heating, motors and drives, zone controls for heating and ventilation, lighting, insulation, solar thermal, heaters and refrigeration. The eligible  technologies are covered by the Energy Technology List or ETL.

As a first port of call please see the ECA Technology List Home Page or the Carbon Trust,  who administer the scheme, for further information. If you wish to discuss a specific project please contact us on 01903 768418 or email us This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Low Emission Cars and Gas and Hydrogen Refueling Infrastructure

Businesses can claim 100 % first year allowances on purchases made between 17 April 2002 and 31 March 2008 on new cars not exceeding 120 grams COper kilometre and equipment for refueling vehicles with natural gas or hydrogen. This scheme has now expired. There is however, tax relief available for those driving company cars with either zero emissions or emissions less than 75 grams CO2 per kilometre. Further information can be obtained from a qualified accountant.

Water Conservation Plant and Machinery

As with energy, the ECA scheme offers 100 % tax relief against selected water efficient plants and machinery. The scheme, governed by the Department for Environment, Food and Rural Affairs (DEFRA), HMRC and AEA Technology, can bring a positive environmental and finance benefit to any company considering investing in new equipment. The Water Technology List, or WTL, covers monitoring and control equipment, efficient,taps, showers, toilets and washing machines, flow controllers, rainwater harvesting equipment, industrial cleaning equipment, water re-use systems, vehicle wash systems, slurry and sludge de-watering equipment and water management equipment.

Please see Business Link or DEFRA for further information or contact us to discuss a specific project you might have on 01903 768418 or email us This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

What are the benefits?

  • Immediate cashflow boost
  • Reduced payback periods for the installed technology
  • Lower energy costs in the longer term through reduced energy bills and reduced Climate Change Levy

Are there any drawbacks?

The scheme is considered to have no drawbacks, whilst it requires certain level of attention to the continually changing list of eligible equipment.

Who is eligible?

All businesses that pay UK income or corporation tax, regardless of their size, sector or location are eligible for Enhanced Capital Allowance scheme.

How do I claim ECA's?

Allowances are then claimed through your corporation tax or self-assessment return. For more information and help on calculating and claiming ECA please see the Business Link.