Farmers urged to use tax breaks to buy energy-efficient equipment

Industry leaders have urged farmers to make better use of a government scheme that offers tax incentives to switch to energy-efficient machinery and equipment.

The Energy Technology List (ETL) scheme was launched in 2014 but the publication of updated advice has prompted the NFU and Farm Energy Centre to encourage farmers to get involved.

The ETL sets out equipment which qualifies for full tax relief under the enhanced capital allowance (ECA) scheme for businesses.

See also: Advice on business rates appeals for energy projects

Among the items on the list are pieces of equipment that would be used on farms such as boilers, electric motors, heaters and lighting (see ‘Eligible product areas’, below).

Any business paying income or corporation tax can set 100% of the cost of the equipment against taxable profits in a single tax year as long as the item was bought from the list.

Allowing the company to write off the cost in this way means investments can be made in energy-saving plant or machinery that might otherwise have been too expensive.

An ECA is claimed through a business’s income or corporation tax return in the same way as any other capital allowance.

‘Fewer discussions’

Farm Energy Centre senior consultant Jon Swain said there had been fewer discussions with clients about claiming the tax break through installing products listed on the ETL as the popularity of other schemes had increased.

These included installing renewable energy generation systems that can be in receipt of generous heat and electricity tariffs through the renewable heat incentive (RHI) and feed-in tarrifs, Mr Swain suggested.

“However this shouldn’t mean that this is ignored, the ETL provides opportunity for improving energy efficiency and reducing fossil fuel energy use in a smaller and less onerous way.

“Simple measures such as installing pipe insulation to the required standard or installation of variable speed drives have a wide range of applications across the agricultural industry, dairy through to horticulture and beyond, and can be installed in an appropriate manner to the business need,” he said.

He encouraged anyone considering an energy improvement project to use the ETL website to find appropriate products.

“There are a wide range of product types available and it is highly likely that key components of the proposed project will be included, if not the entirety of the project itself,” Mr Swain said.

Policy shift

NFU chief renewable energy and climate change adviser Jonathan Scurlock added the union would like to see the ETL revised and better promoted as part of an energy policy shift towards non-tariff-based financial incentives for investment in low-carbon energy technologies, including energy storage.

“The NFU believes many other renewables would also benefit from enhanced capital allowances, including solar PV systems and battery energy storage technologies,” Dr Scurlock said.

Such incentives will be increasingly important, given the approaching closure soon of the feed-in tariffs and RHI schemes for many small-medium scale renewables technologies, he suggested.

“The NFU believes the ETL needs to be better promoted and easier to use for non-specialist customers, better structured and it should be kept up to date with the latest and most policy-relevant technologies, for example complete farm anaerobic digestion systems and battery electricity storage systems.”

Eligible product areas

  • Air to air energy recovery
  • Automatic monitoring and targeting equipment
  • Boiler equipment
  • Combined heat and power
  • Compressed air equipment
  • Heat pumps
  • Heating, ventilation and air conditioning equipment
  • High speed hand air dryers
  • Lighting 
  • Motors and drives
  • Pipework insulation
  • Refrigeration equipment
  • Solar thermal systems
  • Uninterruptible power supplies
  • Warm air and radiant heaters
  • Waste heat to electricity conversion equipment

Energy technology list in a nutshell

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

Farmers Weekly Energy Switch

Save money on your energy bills with our new Farmers Weekly Energy Switch service.
See how much you can save