How the UK government is encouraging the use of solar panels
Within the last year or two, the UK government have introduced various ways to encourage both households and businesses to switch to solar power to help save the environment. This is because it is a renewable source of energy. The methods introduced include FIT schemes (known as feed in tariffs) and grants. This is an important step because fossil fuels are running out fast and take thousands of years to form naturally. This means it is vital to save as much as possible as well as finding other ways to produce electricity.
What are Enhanced Capital Allowances?
There are also ECAs which stand for Enhanced Capital Allowances and basically let a company claim back all of their capital allowances within the first year when they purchase certain equipment that is better for the environment. This allows them to cut down the tax they have to pay to the government and therefore help them to increase their profits. If a business installs solar panels to power their factory or office for example then they are able to claim this expense back. The main aim of this is to make sure more companies are using renewable sources and helping to protect the environment, especially as more than 50% of the UK's electricity is used by commercial organisations. There are three different aspects included in the ECA scheme which are cars that produce low amounts of carbon dioxide, equipment that doesn't consume as much energy and also water efficient machinery.
The terms and conditions for using ECA
There are various qualifying requirements of the ECA scheme. For example you need to be a full tax paying business in the UK in order to be able to take part in it, and you can only claim on brand new energy saving machinery, so this excludes second hand. Other factors are included as well so it is best to check the full details to make sure you qualify, as well as the Energy Technology Product List for more information on what can be claimed as an expense or not.
Advantages for businesses
ECA can make your business become more profitable as you invest in energy saving devices. This can also improve your green credentials and may entitle you to further government grants. It will maximise your popularity as a company because you will be seen to be putting something back into the community by protecting the environment. This could ultimately lead to more support and sales over other less green competitors. Dest: Moodia