Solfex are pleased to announce the inclusion of the TZr range high performance evacuated tube solar collectors to the Enhanced Capital Allowance ( ECA ) scheme.

The ECA scheme is a key part of the Government's programme to manage climate change, and is designed to encourage businesses to invest in energy-saving equipment.

The Enhanced Capital Allowance (ECA) scheme enables businesses to claim 100% first-year capital allowance on investments in energy-saving equipment, against the taxable profits of the period of investment.

All businesses that incur qualifying spending can claim ECAs. ECAs bring forward the time that capital allowances are available for spending on plant and machinery thereby providing a cash flow advantage.

A higher standard of energy-saving Capital allowances enable businesses to write off the capital cost of purchasing plant and machinery, for example equipment such as cars, computersboilers and motors, against their taxable profits. They take the place of depreciation charged in commercial accounts

The general rate of capital allowances is 25% a year on a reducing balance basis. For example, if a business spent £1,000 on a new boiler, it could claim capital allowances of £250 (25% of £1000) against the taxable profits of the period of investment. Assuming the company pays corporation tax at 30%, the effect of the capital allowance for spending on the boiler in the period of investment would be to reduce the business's tax bill by £75 (£250 @ 30%)..

The unrelieved balance of £750 (£1,000 less £250) is carried forward for relief against profits of later years. In this way the spending is written off over a number of years.

If, however, the business invested the same amount in a high efficiency boiler from the Energy Technology Product List, it could claim an 100% first-year capital allowance of £1,000 against the taxable profits of the year of investment. Again assuming the company pays corporation tax at 30% the effect of the first-year allowance would be to reduce the business's tax bill by £300 (£1,000 @ 30%). Thus, the first-year allowance can confer a cash flow advantage.

The 100% first-year capital allowance relieves all the qualifying spending. Therefore there is no unrelieved spending to carry forward against profits of later years.

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