What are enhanced capital allowances?
Capital allowances allow for the costs of capital assets to be written off against a business's taxable profit at a specified percentage rate. For example, the main rate of capital allowances for plant and machinery is 25% a year on the reducing balance (depreciation) basis.

Enhanced Capital Allowances (ECA) or First Year Allowances (FYA) are specially increased rates of allowances. A greater proportion of the cost of an investment is eligible for tax relief in the same tax period, which means a valuable boost to cash-flow. Water efficient technologies are eligible for 100% tax relief for investment in designated equipment. The graph below shows how the FYA of the Enhanced Capital Allowance will boost cash-flow in the first year compared with the yearly reducing capital allowance.

If a company has taxable profits of £10,000 and invested £3000 on water efficient technologies in the same tax period, then the tax payable will be calculated on the basis of £7,000 profit, which boosts cash flow by £3000 x relevant tax rate %.

Who can claim ECAs?
UK businesses that pay UK corporation tax or income tax can claim ECAs on their spending on designated water-efficient equipment.

Local authorities, schools and non-profit organisations are not eligible for tax relief or allowances due to not having taxable profits, but can still benefit from investing in water efficient equipment. By investing in Water efficient equipment these organisations can still reduce their waste water, water treatment and heating bills, not to mention contributing to saving the environment.

The Water Technology List
Products that meet specific water saving criteria are found on the Water Technology List from the ECA Scheme. It was first published in 2003 and comprises two parts: the Water Technology Criteria List and the Water Technologies Product List. In the case of efficient showers, water saving features include low flow shower heads, timed flow controls and thermostatically controlled shower sets.

Eligible showers must have a flow rate of 9 litres/minute at 3 bar supply pressure such that water usage is minimised during each showering event. Timed flow control showers close off after a set period ~ between 30 and 40 seconds at 3 bar supply pressure. Water use is reduced during showering and also the chance of showers being left running is minimised. Thermostatically controlled shower sets help to save water since the user spends less time outside the shower waiting for the temperature to stabilise or reach a comfortable level.

• All Horne surface mounted shower panels are fitted with flow regulators or flow restrictors, which maintain the flow rate at 8 litres/minute at 3 bar supply pressure.
  
• The TSV1 range of shower panels are thermostatically controlled showers, which accurately maintain the temperature even during fluctuations in water supply pressure and temperatures. Horne TSV1 shower panels all operate over and above the performance requirements of the NHS Model engineering specifications D08 Thermostatic mixing valves (Healthcare premises) certified by Buildcert under the TMV3 Scheme.

• The SP range of shower panels all feature timed flow controls for reduced water usage and wastage.

For further information about the Enhanced Capital Allowance Scheme and the Water Technology List please visit the ECA website by clicking the 'Qualified Water Technology List' logo above.