The Enhanced Capital Allowance (ECA) scheme offers a 100 per cent first-year allowance for investments in certain water efficient plant and machinery. It lets businesses write off 100 per cent of the cost of qualifying plant and machinery against taxable profits in the year of purchase. This can bring significant financial savings and reduce your business' impact on the environment.
The ECA water scheme is managed by the Defra and HM Revenue & Customs, (HMRC) in partnership with AEA Technology, who manage the scheme on behalf of Defra. The ECA water scheme includes a variety of technologies, such as water efficient taps, toilets, monitoring equipment and industrial cleaning equipment. Eligible products are detailed on the Water Technology List (WTL).
This guide is mainly aimed at businesses that want to buy water efficient products, and the manufacturers and suppliers of those products. It is also relevant to organisations that are not eligible to claim ECAs but can use the WTL as a sustainable procurement tool.
It outlines how the ECA water scheme works and which technologies are covered. It also explains how manufacturers and suppliers of water efficient products and technologies can apply to have these added to the WTL.
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The ECA water scheme encourages businesses to invest in technologies that save water and improve water quality.
The scheme lets your business claim 100 per cent first-year allowances, for example, tax relief, on investments in certain technologies and products.
Claiming an ECA means you can write off, for example, deduct, the whole cost of buying a qualifying water-efficient technology against your taxable profits in the year you bought it. For more information, see the section below on how to claim an ECA for water efficient products.
Only new plant and machinery are eligible for an ECA, used or second-hand plant and machinery do not qualify. Eligible equipment is found in the WTL. The criteria may be reviewed annually to keep pace with technological progress. See the section below on technologies covered by the ECA water scheme.
Claiming ECAs for buying water efficient equipment will enable your business to reduce investment costs and its environmental impact. Benefits include the first year tax relief. This will reduce the time it takes to pay back your investment.
Your water bills will also be reduced long-term by installing water-saving equipment.
Organisations which are not eligible for tax relief (including capital allowances) such as local authorities, schools and non-profit organisations, can still use the WTL as a source of information on equipment that may save water and reduce water costs.
If you manufacture or supply products included in the ECA scheme for water efficient technologies, you can use a recognised symbol to promote your products and offer customers a unique financial benefit. For information on getting products included, see the section below on how to apply to get your product included in the ECA water scheme.
For general enquiries about the WTL, you can call the WTL Advice Line on Tel 0844 875 5885. Alternatively, you can email your questions to wtl@aeat.co.uk.
ECAs are available on products and technologies that meet the specified criteria within the ECA scheme and are included on the WTL at the time of purchase.
Please note that ECAs are not available on the cost of plant and machinery for use within a property used as a dwelling that you lease out in the UK or overseas. However, items bought for use within common parts may qualify.
The following technology areas are included on the WTL:
To be eligible for the ECA, the product must be on the WTL at the time you buy it, you cannot claim an ECA on a product that is added to the WTL after you purchased it.
New products are added to the WTL on the first day of every month. The criteria for the WTL may be reviewed annually and can include the introduction of new technologies.
A random selection of products listed on the WTL are tested regularly to check they meet the eligibility criteria. For more information, see the section below on testing products in the ECA water scheme.
You can identify products which are included on the WTL as they can use the WTL symbol.
Search for water efficient technologies eligible for ECAs with Defra (Opens new window)
If you are a supplier or manufacturer and your product is not currently included on the WTL, you can apply to have it added. See the section below on how to apply to get your product included in the ECA water scheme.
For general enquiries about the WTL, you can call the WTL Advice Line on Tel 0844 875 5885. Alternatively, you can email your questions to wtl@aeat.co.uk.
Water reuse 'systems' are processed differently to 'products' on the WTL.
Water reuse technology on the WTL has two sub-technologies:
Due to their bespoke nature, these technologies are both eligible for ECAs via a certification scheme for each individually installed system, rather than the standard product list used for other technologies on the WTL.
Water reuse involves reusing suitably treated wastewater from one process for a different purpose. Water reuse technology reduces the demand on drinkable sources of freshwater and reduces the volume of wastewater discharged to sewer. Water reuse can be an economical way to reduce your costs.
The business sectors that can benefit most from using water reuse systems include the following industries:
It is the responsibility of the business installing the water reuse system to apply to have it certified as eligible for an ECA, not the business which manufactures or supplies it. If the application is approved, Defra will award the business a 'Certificate of Environmental Benefit'. This certificate verifies that the design of that water reuse system meets the water-efficient criteria.
If you are installing a water reuse system, you should ask your manufacturer or supplier to ensure that the design meets the eligibility criteria, as you must provide supporting evidence for this to Defra.
Any investments in these technologies will only qualify for ECAs if a certificate has been issued for the equipment. A certificate can be revoked in certain circumstances, for example, if the recovery and reuse system is certified at design stage and the design of the system changes during development or the development ceases. If the certificate is later revoked then you should amend the relevant tax return to withdraw any 100 per cent first-year allowance claimed.
For general enquiries about the WTL, you can call the WTL Advice Line on Tel 0844 875 5885. Alternatively, you can email your questions to wtl@aeat.co.uk.
The ECA scheme offers a 100 per cent first-year allowance for investments in certain water efficient plant and machinery. It means you can write off, for example, deduct 100 per cent of the cost of qualifying plant and machinery against your taxable profits in the year of purchase.
To qualify, the plant and machinery must be on the WTL at the time you buy it. You should claim ECAs for water efficient equipment in the same way that you claim other types of first-year allowance through your Self Assessment tax return or your Corporation Tax Return.
If you need help making your claim for ECAs, you should contact your tax adviser or call the HMRC Self Assessment Helpline.
Contact details for HMRC Self Assessment Helpline
Search for water efficient technologies eligible for ECAs on the Defra website (Opens new window)
If you manufacture or supply water efficient products, you can apply to have them added to the WTL. This enables businesses buying your products to claim tax relief under the ECA scheme. In order to add your product to the list, your product will need to meet certain eligibility criteria.
Once you have a product on the WTL, you are eligible to use the WTL symbol as a promotional and marketing tool for that product. This logo shows potential buyers that your product is water efficient and that they can get tax relief on the cost of buying it.
For water reuse systems, the business installing the system should apply to have the system certified as eligible for an ECA, not the business which manufactures or supplies it. For more information, see the section above on ECAs for water reuse systems.
If the technology your product or system uses is not on the WTL, you can apply to the Defra to have it considered for inclusion.
To make an application, you need to use the Supplier Registration and Information Service. You can also use this online service to track the progress of your product, system or technology applications.
For general enquiries about the WTL, you can call the WTL Advice Line on Tel 0844 875 5885. Alternatively, you can email your questions to wtl@aeat.co.uk.
To maintain the integrity of the WTL, Defra regularly tests a sample of products on the WTL to check that they meet the eligibility criteria. Products are either selected randomly or are tested following a complaint from an end user business or other organisation.
If a product that you produce or supply is selected for testing, you must make it available, free of charge. Defra will pay the costs of these initial tests and any transportation.
If selected, you will receive a letter or email from Defra containing details of the:
If you don't supply the product for testing, or a satisfactory explanation why you haven't, Defra will send you a letter giving you 60 days notice that your product will be removed from the WTL.
Defra will let you know the test results by letter or email, telling you whether the product has passed or failed, and send you a copy of the test report.
If your product fails, you have the following options:
If the product is retested and meets the criteria, you will be informed by letter or email. If the product again fails to meet the criteria, Defra will inform you that it will be removed from the WTL on the first of the following month. Defra won't reimburse you for the retest if the product fails.
If you need help in making your capital allowances claim you can contact the HMRC Self Assessment Helpline or the WTL Advice Line.
Contact details for HMRC Self Assessment Helpline
WTL Advice Line on: Tel 0844 875 5885 email: your questions to wtl@aeat.co.uk.
