|
Coolus Saves You Money
With the cost of energy going up, especially electrical, how can the homeowner save on the energy used by their AC system around the home?
One of the best ways to save energy is to keep the cool air in and the hot air out and vice versa in the winter months. In order to achieve this all outside doors and windows and attic areas need to be insulated.
Close curtains, blinds and shutters in order to keep the suns rays out.
Set the temperature at the highest level as each degree raised lowers your energy consumption.
On the inside unit clean or replace air filters on a regular basis as dirty air filters reduce the air flow and therefore increase the energy consumption.
On the outside unit clean on a regular basis of leaves etc…..as obstructions to the airflow will lower the unit’s efficiency.
Plan what may be know as hot household chores ironing, baking etc and carry them out early in the morning.
It is also very important to have the unit serviced every spring by a certified technician in order to obtain maximum performance and efficiency
Better still why not consider an all year round maintenance contract? Regular maintenance will not only extend the life of your unit it will also save you money.
Save on running costs
The new "inverter" driven range of air conditioning units, produced by Fujitsu, Toshiba, Mitsubishi, Daikin and most of the leading air conditioning manufacturers are available in a wide range of heating and cooling capacities with automatic changeover as standard on all models. This range uses the ozone friendly R407C and R410A refrigerants and achieves a significant reduction in energy consumption compared with conventional systems. These systems are registered on the Energy Technology List which enables clients to qualify for up to 100% first year enhanced capital allowance on the total cost of the system. (For example most of the cost of the installation can be offset against taxes - for further information visit www.eca.gov.uk).
Coolus and Enhanced Capital Allowance
Did you know ECA’s enable a business to claim 100% first year capital allowances on their spending. Find out more by reading the following pages or by visiting www.eca.gov.uk/etl/ or contact us at Coolus free on 0800 731 1737
Introduction
The Enhanced Capital Allowance Scheme enables businesses to claim 100% first year capital allowances on investments in energy saving technologies and products. Businesses are now able to write off the whole cost of their investment against their taxable profits of the period during which they make the investment.
Enhanced Capital Allowances will encourage businesses to invest in low carbon technologies.
The Key Features of the Scheme
All businesses in the charge to UK tax can claim enhanced capital allowances, on their qualifying expenditure, regardless of size, industrial or commercial sector or location
·Enhanced capital allowances permit the full cost of the investment in specified technologies to be relieved for tax purposes against taxable profits of the period of the investment.
·The qualifying technologies have to meet the published energy saving criteria. They are published in the Energy Technology Criteria List, where the criteria will be reviewed on an annual basis;
there are no territorial restrictions on manufacturers wishing to place their products on the list or the source of products.
·Only investments in new and unused plant and machinery can qualify for ECAs.
For the Inland Revenue guidance on the scheme for Enhanced 100% Capital Allowances and Energy Saving Investment please visit http://www.inlandrevenue.gov.uk/capital_allowances/eca_guidance.htms for space heating, Radiant and warm air heaters, Solar thermal systems, Energy efficient refrigeration equipment - display cabinets and compressors; Specific compressed air system equipment. The existing technology class for boilers and add-ons was also expanded to include oil-fired boilers.
The Government also extended the ECA scheme to include expenditure incurred from 17 April 2002 on energy saving technologies for leasing to qualify for 100% allowances. The new Energy Technology List was published on 15 July 2002 and the Treasury Order to give statutory effect to the new list came into effect on 5 August 2002. Spending on the new technologies can qualify from that date.
How to Claim Capital Allowances
Enhanced Capital Allowances (ECAs) are a tax relief given through the tax system by reducing the taxable profits of the business. The ECA scheme builds on existing statutory provisions, under which businesses may obtain tax relief, in the form of capital allowances, for their investment in plant and machinery. Capital allowances allow the costs of capital assets to be written off against a business's taxable profits. They take the place of depreciation charged in the commercial accounts which is not allowed for tax.
The main rate of allowances for plant and machinery is 25% a year on the reducing balance basis, which spreads the benefit over a number of years (about 95% of the cost is relieved in 8 years). ECAs have been granted in other areas before but this is the first time that they have been introduced for use to support energy efficiency.
ECAs enable businesses to claim 100% first-year capital allowances on their investment in designated energy-saving plant and machinery in the year in which the expenditure is incurred. ECAs bring forward relief, so that it can be set against profits of a period earlier than would otherwise be the case.
The benefit to businesses of ECAs is thus a cash flow boost resulting from the reduction of the business's tax bill of the year in which the investment is made.
Capital Allowances can be claimed on capital expenditure incurred on the provision of plant and machinery for use in a business's trade. It is a requirement of the legislation that as a result of incurring the expenditure the machinery or plant belongs to the person making the claim.
Some assets will not qualify for ECAs. These include assets that are buildings or structures as defined by sections 21 to 23 Capital Allowances Act 2001 as these assets do not qualify for plant and machinery capital allowances.
How to Claim for ECAs
Claims for ECAs are made in the same way as other capital allowances on the Corporation Tax Return for companies and the Income Tax Return for individuals and partnerships.
The Inland Revenue's guidance on the ECA scheme can be found at www.inlandrevenue.gov.uk/capital_allowances/eca-guidance.htm.
The Inland Revenue administers claims for ECAs and they have wide-ranging powers to investigate any aspect of the return. If errors are identified, any tax underpaid may be recovered with interest and, in cases of negligent or fraudulent conduct,
penalties. Penalties cannot exceed 100% of the tax that would otherwise have gone unpaid.
Claims must be based on the costs incurred. Where you have purchased a qualifying Product that is not already incorporated into a larger item of plant and machinery you must use the price paid for the item as the base of your claim. If you have purchased a qualifying product which is incorporated into a larger piece of equipment, the eligible claim value is provided in the Claim Values section of this site. The remainder of the equipment can attract capital allowances at the normal (rather than the Enhanced) rates.
The words ‘on the provision of machinery or plant’ in the Capital Allowances Act are interpreted narrowly and exclude remote or indirect expenditure. Some common types of cost are detailed below:
·Direct transportation and installation costs can be regarded as expenditure on the provision of plant or machinery. These can include, for example, the costs of transport, crane hire costs to lift machinery in to place, project management costs, installation, modifications to existing plant and machinery, and commissioning.
·Professional fees qualify only if they are directly related to the acquisition and installation of assets that are plant or machinery. Fees incurred on such things as feasibility studies or design works are generally too remote from the acquisition and installation to qualify. The eligibility of such costs is a question of fact based on the particular circumstances of the case.
·Costs of alteration to an existing building arising as a direct result of the installation of qualifying plant and machinery may be eligible for ECA.
1.ECA contacts
This document is for guidance - should you have any queries on ECAs or the Inland Revenue's position, they may be contacted directly:
1.1General enquiries about ECAs and the Technology lists
The Carbon Trust
9th Floor
3 Clement's Inn
London WC2A 2AZ
Telephone: 020 7170 7082 / 7033 or 020 7170 7000
E-mail: eca@thecarbontrust.co.uk
www.eca.gov.uk
1.2Points relating to the tax system
Paul Thomas at Inland Revenue
020 7438 7143;
paul.thomas@ir.gsi.gov.uk
Heat pump – single split systems
Qualifying systems are eligible for a full ECA against the entire (though reasonable) installation cost. This can include piping, electrics, crane hire, commissioning etc…. Investments in heat pumps can only qualify for ECAs if the heat pump components are specifically named on the Energy Technology Product List – these are:
2.Heat pump – multi split systems
·Qualifying systems are eligible for a full ECA against the entire installation cost as with single split systems. However, only combinations of 2 indoor units are registered with both Eurovent and the Carbon Trust – where other indoor units are added to the system, they do not qualify and must be shown as a separate part of the installation with associated costs. Investments in heat pumps can only qualify for ECAs if the heat pump components are specifically named on the Energy Technology Product List
VRF systems that meet the required performance (D energy label in both heating and cooling modes) may be included in this listing – however until testing standards show the connected indoor units, only the outdoor units and the associated costs will attract an ECA. The remainder of the system must be shown separately in the cost breakdown and will only qualify for a standard capital allowance.
Fixed cost components
Where you acquire a larger item of plant or machinery that has a qualifying product already installed in it as a component, the proportion of the cost that relates to that qualifying component will attract Enhanced Capital Allowances, the remainder of the equipment will attract capital allowances at the normal rate.
The amount that you are able to claim on when buying a qualifying product that is incorporated into a larger piece of equipment has been calculated by Government and is detailed below.
|
