Capital allowances – making the best of enhanced capital allowances
From 1 January 2016 the annual investment allowance reduced from £500,000 to £200,000. If you find that your capital expenditure already exceeds the allowance available look a little closer and see whether any of it qualifies for enhanced capital allowances (ECAs). This is aimed at encouraging businesses to invest in energy- efficient plant and machinery and 100% allowances are given for qualifying expenditure.
The energy technology list (ETL) of products qualifying for ECAs is managed by the Carbon Trust on behalf of the government and covers such items as refrigeration equipment, pipework insulation, boiler equipment, high speed hand driers etc. In all there are over 16,000 qualifying items.
Companies that are loss making can surrender their ECAs for 19% tax credits up to a maximum of the company’s PAYE and NIC liabilities for the year that the claim is made or, if greater, £250,000.