You can write off 100% of your purchase cost against profits in a single tax year if you buy an ECA approved UPS system or other ECA-approved equipment.
The UK government recognises that large public and private sector organisations are sensitive to rising energy prices because energy can account for a large part of their operating costs. These sectors are also responsible for a significant proportion of the UK’s greenhouse gas emissions. Additionally, shareholders, employees and suppliers as well as customers expect modern organisations to be proactive in driving down carbon emissions.
The government addresses these issues in their policy: ‘Energy demand reduction in industry, business and the public sector’. This includes a Carbon Plan which states that if the UK is to cut its greenhouse gas emissions by 80% by 2050, energy efficiency will have to increase across all sectors to the extent that energy use per capita is between a fifth and a half lower than it is today. The policy also includes a number of practical actions that organisations can take to improve their contribution to the Carbon Plan’s success. One of these actions is the provision of Enhanced Capital Allowances.
The ECA scheme means that a business can invest in energy-saving plant or machinery that might otherwise be too expensive.
The first year allowances let businesses set 100% of the cost of the assets against taxable profits in a single tax year. This means the company can write off the cost of the new plant or machinery against the business’s taxable profits in the financial year the purchase was made.
An ECA is claimed through a business’s income or corporation tax return in the same way as any other capital allowance. HM Revenue and Customs is responsible for the tax-related aspects of the ECA scheme.
To qualify for an ECA, a purchased product must comply with the requirements of the Energy Technology List. This comprises two parts:
- The Energy Technology Criteria List which contains details of the energy-saving criteria that must be met for each of the technology classes. This list is updated and published annually.
- The Energy Technology Product List which contains a list of products that have been certified as meeting the relevant energy technology criteria. This list is published annually and updated at the beginning of each month on the ECA website.
To find an ECA approved UPS solution, search on the Energy Technology Product List under KOHLER Uninterruptible Power – KOHLER Uninterruptible Power Ltd. This returns the result ‘KOHLER PW 9500 DPA’.
As well as the technical parameters covered in the Energy Technology List, there are other commercial and administrative considerations that purchasers should be aware of when preparing a claim. The claim should be based on the invoice value of the eligible product, and must be limited to the cost of equipment as listed in the ETL. For example if a KOHLER PW 9500 DPA UPS system was the only ECA-approved component of a complete power subsystem purchase, only the cost of the UPS itself would be claimable.
However, the direct transportation and UPS installation costs associated with the eligible equipment can usually also be included within the claim. Check the ETL eligibility criteria website for more information. Note also that equipment is only eligible for an ECA from the “added” date shown on the ETL website until any “removed” date.
Modern UPS sytems such as KOHLER Uninterruptible Power Ltd.’s KOHLER PW 9500 DPA offer minimised cost of ownership through achieving very high operational efficiency. The UPS product’s inclusion on the ETL not only brings additional cost savings, but also underwrites its status, in the government’s view, as leading the industry in energy-saving efficiency.
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