Tax Relief on Plant and Machinery Investment

Tax Relief on Plant and Machinery Investment could be available to any business investing in suitable product areas.

Farmers have been urged to use a government scheme that gives tax incentives to switch to energy-efficient machinery and equipment. However, the Energy Technology Product list is relevant to new plant in any business. Qualifying items can attract 100% tax relief in addition to the Annual Investment Allowance for general plant and machinery up to £200,000.

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.

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).

Potential to offset 100% of the cost

Businesses can already claim 100% of the cost of qualifying plant and fixtures against income or corporation tax, up to £200,000 spend in any one year. Expenditure over this amount can then be reclaimed at 18% each year. If items are sourced from the ETL then 100% of the cost of the equipment can be offset against taxable profits in a single tax year in addition to the £200,000.

Allowing the company this flexibility can help with cashflow where large investments in plant and equipment are required.

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

The ETL provides opportunities for improving energy efficiency and reducing fossil fuel energy use in a smaller and less onerous way than some other tax relief schemes.

Tax Relief on Plant and Machinery Investment

Measures such as installing pipe insulation to the required standard or installation of variable speed drives have a wide range of applications and can be installed according to business need.

Eligible product areas include:

  • 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

If you think that your own business may benefit from using the ETL scheme when purchasing new plant and equipment, please get in touch with us at Jones Harris for a no-obligation chat.

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