Farmers reminded about tax scheme for energy-saving kit

Farming businesses are being reminded that time is running out if they want to take advantage of one of the benefits of Enhanced Capital Allowances (ECA) for energy-saving equipment.

The ECA scheme allows businesses to write off 100% of the equipment against taxable profits in the year of purchase.

However, accountant Saffery Champness has highlighted that the scheme also works on the basis that companies that have invested in energy-efficient plant, and have incurred a loss, are able to surrender that element of loss attributable to ECAs in return for a cash payment, with the amount payable currently 19% of the loss surrendered.

See also: Energy saving kit offers tax benefit

However, the ability to surrender the loss for a cash payment is only available to companies, so individuals, trustees and partnerships are excluded.

Also, plant or equipment that has benefited from support such as the Renewable Heat Incentive or Feed in Tariffs is ineligible.

Mike Jones, senior manager at Saffery Champness and a member of the firm’s Landed Estates and Rural Business Group, warned that the window of opportunity for companies to take advantage of this facility was March 2018.

“The list of qualifying plant and equipment is extensive,” he said. “Expenditure within eligible categories is frequently incurred on agricultural or estate buildings, or converting existing space for other commercial use, and we know of many instances where benefit has been gained from this particular relief.”

Equipment that qualifies is specified on the Energy Technology List (ETL) managed by the Carbon Trust. The list covers about 16,000 items and is updated regularly.

Areas covered include: air-to-air recovery; automatic monitoring and targeting equipment; boiler equipment; combined heat and power; compressed air equipment; heat pumps; heating, ventilation and air conditioning; high-speed hand air dryers; lighting; motor and drives; pipework insulation; radiant and warm air heaters; refrigeration equipment; solar thermal systems and uninterruptible power supplies.

The ECA scheme for energy-saving technologies is designed to incentivise businesses to invest in energy-saving equipment which normally carries a price premium when compared with less efficient alternatives.

Are you, like many other farms, missing out on tax claims for R&D?

If you’re a limited company, you could be eligible for tax credits if you’re carrying out R&D on your farm. For more information and to find out if you’re eligible visit our R&D tax credits page.

Find out more