When we quote, we tend to supply a full breakdown of tasks and costs, which makes it easier to identify where your finances are being spent. Increasingly, we are being asked if there are grants and other alternatives to using the banks?
Grant aid depends on several factors and it’s an area for others to comment on, but there are grants out there so do hunt or contact your financial advisor.
There is one very good, and under-used, source of grant aid that normally applies to many large refurbishments projects: Enhanced Capital Allowances (ECAs).
ECA legislation was introduced to encourage the use of energy-saving plant and machinery, low carbon dioxide emission cars, natural gas and hydrogen refuelling infrastructure, and water conservation plant and machinery in construction projects.
You can claim capital allowances when you buy assets that you keep to use in your business, eg: equipment, machinery, business vehicles, e.g. cars, vans or lorries.
As well as plant and machinery, you can also claim capital allowances for renovating business premises in disadvantaged areas of the UK. The common parts of a residential development (e.g. lifts) should qualify for allowances.
To qualify, the item acquired must qualify as plant and machinery and must satisfy the following:
- The plant and machinery must be unused and not second hand.
- The expenditure is incurred after 1 April 2001.
- The plant must either be a listed product or meet the energy-saving or water conservation criteria specified by the Carbon Trust.
The items currently qualifying include:
- Energy-Saving Technologies
- Air to air energy recovery
- Automatic Monitoring and Targeting
- Boilers, including Biomass
- Combined Heat and Power (conditions apply)
- Compressed air equipment
- Heat pumps for space heating, including ground source
- HVAC zone controls
- High Speed Hand Air Dryers
- Lighting and controls
- Motors and drives
- Pipework insulation
- Radiant & Warm Air Heaters
- Refrigeration Equipment
- Solar thermal systems
- Uninterruptible Power Supplies.
Water Conservation Technologies:
- Cleaning in Place Equipment
- Efficient Showers
- Efficient Taps
- Efficient Toilets
- Efficient Washing Machines
- Flow Controllers
- Leakage Detection Equipment
- Meters and Monitoring Equipment
- Rainwater Harvesting Equipment
- Small Scale Slurry and Sludge Dewatering Equipment
- Vehicle Wash Water Reclaim Units
- Water Efficient Industrial Cleaning Equipment
- Water Management Equipment for Mechanical Seals.
You can deduct some or all of the value of the item from your profits before you pay tax. As a 100% first year allowance, investment in ECA qualifying items provides a significantly increased tax saving over the alternative allowances available on these items. In addition, adoption of ECA qualifying items may also improve a project’s Building Research Establishment Environmental Assessment Method (BREEAM) ratings and contribute towards achieving an improved Energy Performance Certification rating.
For more information on listed products and criteria, check out the ECA website.
Bob Turner, MD