Enhanced capital allowances (ECA)
The measure
As has become expected in each Budget since the introduction of the ECA regime in 2001, the list of qualifying technologies has again been updated.
Uninterruptible power supplies (UPS), air to water heat pumps and close control air conditioning systems have all been added to the list of energy-saving technologies qualifying for the 100% first year allowances, whilst three forms of heat pumps have been removed. Further minor housekeeping changes are also to be made to the existing criteria for both the energy saving and water efficient schemes.
Who will be affected?
All businesses that are entitled to claim first year allowances.
When?
The changes to the schemes will have effect on or after a date to be appointed by Treasury order prior to the summer 2009 Parliamentary recess.
The significant NPV benefit of up to circa 30% in securing ECA's, remains despite the introduction of the temporary 40% FYA for main pool expendiuture, as generally assets otherwise attracting ECA's would qualify as special rate assets and therefore only receive writing down allowances at a rate of 10%.
