Consider enhanced capital allowances (ECAs)

Enhanced Capital Allowances (ECA’s) are a straightforward way for a business to improve its cash flow through accelerated tax relief. The scheme encourages businesses to invest in energy saving products to help reduce carbon emissions.

ECAs are a welcome addition to basic capital allowances, as you can now claim 100% against Corporation tax of the benefit in the first year. ECAs are specific and cover energy saving plant and machinery, low CO2 cars, water conservation plant and machinery.

Furthermore, the fitting out of office buildings provides excellent opportunities to benefit from the availability of capital allowances and their associated tax relief. The value of capital allowances is based on the actual expenditure incurred on machinery and plant, energy saving machinery and plant. The main items include:

• Heating, ventilation & air conditioning
• Lighting & luminaries
• Lighting controls
• Sanitary fittings
• Data wiring
• Raised access floors
• Demountable partitions
• Carpets
• Window blinds
• Furniture and equipment

Typically, between 50 and 65% of the cost associated with fitting out high quality office buildings from shell and core will qualify for capital allowances, and are available at 25% per annum on a reducing balance basis. The rules about capital allowances are given in the Capital Allowances Act 2001 and subsequent finance acts. Further information about energy-saving machinery and plant can be found at www.eca.gov.uk.