What is it?

The Enhanced Capital Allowance Scheme is a government initiative to encourage businesses to invest in products that encourage efficient water use and improvements in water quality

What are the benefits?

By investing in products that use water more sustainably, businesses can expect to enjoy an initial cash boost through the Enhanced Capital allowance, as well as an ongoing cost saving on water bills.

What kind of products are available?

Rainwater is one of the most effective products to invest in, but other items include leakage detection equipment, and more efficient taps and toilet cisterns. Products undergo evaluation before the Government will add them to the official Water Technology List. Rainwater Harvesting was added in March 2004.

Cash boost?

Businesses investing in the products on the Water Technology List can claim tax relief through the Enhanced Capital Allowance (ECA) scheme which may provide a cash flow boost.

How does the tax issue work?

Businesses can offset 100% of the cost of products on the Water Technology List against their taxable profits. All businesses that pay corporation and income tax in the UK are eligible for the tax allowance.

If a company spend £20,000 on the supply and installation of the equipment on the WTL, the company can reduce the taxable profits it pays tax on by £20,000.

Assuming the company pays tax at a rate of 30% it will pay £6,000 less tax which equates to a 30% discount on the cost of the rainwater harvesting system.

You may pay tax at a different rate to the example above or have existing tax reliefs. To understand how ECAs will affect your business please either contact your own tax advisor or visit the Inland Revenue website

Further information

Please contact us to discuss the benefits of rainwater harvesting and to discover about how the Scheme can work for your business.

The following websites may also prove useful: