Which technologies and products qualify for ECAs?
Boiler equipment
Heating ventilation and air con equipment
Lighting
Refrigeration equipment
Radiant and warm air heaters
Pipework insulation
Automatic monitoring and targeting (AMT)
...And more
How can a company benefit from an ECA?
Where a Company is in a loss-making position, they may be able to surrender their ECA’s in exchange for a cash payment from the Government. This is particularly beneficial where the company’s tax losses cannot be relieved for a number of years because they have insufficient profits to absorb the losses.
The first-year Tax Credit will be in the form of 19% of the surrenderable loss, but the amount of the payable credit cannot be more than the greater of the Company’s total PAYE and NIC liabilities for periods ending in the chargeable period and £250,000.
A Company may claim a payable first-year Tax Credit for a chargeable period if:
It incurs relevant first-year expenditure for a qualifying activity and has received a First Year Allowance (FYA) in respect of that expenditure.
it makes a loss in carrying on the qualifying activity and that loss, or part of that loss, is surrenderable,
it is within the charge to Corporation Tax on the profits from that qualifying activity,
it is not an excluded Company in that chargeable period.
Companies may surrender all or part of its surrenderable loss. Once a loss has been surrendered for a Tax Credit payment it is not available for relief in any other way. Any losses carried forward to future accounting periods are reduced by the amount of loss surrendered for a first-year tax credit. A Tax Credit is not treated as taxable income.