The Enhanced Capital Allowance Scheme for Sustainable Water Technologies
June 05th 2006 To encourage businesses to place water efficiency as one of their key objectives in their environmental management strategies, the Government decided to reward good environmental practices. The Enhanced Capital Allowance (ECA) scheme for sustainable water technologies, which is modelled on the ECA scheme for energy saving investments, was launched in 2003 and provides accelerated tax relief to businesses investing in designated sustainable water technologies.
All businesses that pay UK corporation tax or income tax, and have sufficient profits for the allowance to be written off against, can claim the allowance when purchasing any of the designated water technologies which are listed on the ECA website.
The website www.eca-water.gov.uk, which is also known as the Water Technology List, contains details of the technologies, their qualifying criteria and the products that meet these criteria. The website promotes products that encourage sustainable water use and rewards businesses for investing in them. Businesses purchasing any of the designated technologies can claim 100% tax relief for capital costs against taxable profits in the year of investment. Eligible products/systems are available under the following technology categories:
• Cleaning in place equipment
• Efficient membrane filtration systems for wastewater reuse
• Efficient showers
• Efficient taps
• Efficient toilets
• Flow controllers
• Leakage detection equipment
• Meters and monitoring equipment and
• Rainwater harvesting equipment
By investing in these technologies, businesses can reduce their water consumption by using water more efficiently and thereby reducing their water bills. In addition, 100% ECA’s bring forward the time that tax relief is available on qualifying investments, allowing the full cost to be written-off in the period in which the qualifying spending is incurred, which can deliver a helpful cash flow boost and a shortened payback on investment.
The ECA scheme not only provides a financial incentive for businesses to invest in sustainable water technologies, but also encourages innovation for the development of more environmentally beneficial technologies.
So, if your business is considering purchasing new equipment to help reduce water use, why not make it sustainable – not only saving water but also saving money.
Principal guidance from the Secretary of State to the Director General of Water Services, 2004 periodic review of water prices. Defra March 2004.
http://www.defra.gov.uk/environment/water/conserve/wsg/pdf/wsg-actionplan.pdf More articles from DEFRA: | 
