It is widely known that most business equipment attracts full tax relief in the year of purchase these days. This is under the relatively generous annual investment allowance (AIA) that gives full relief for most equipment purchases. The AIA is broadly up to £200,000 per year per business.
However if your company has tax losses carried forward, the tax relief on capital expenditure is simply making those tax losses bigger. This may be useful in future but doesn’t help cash flow of a loss making business.
Help is at hand if the equipment has an environmental benefit. Specifically if the equipment is on the energy technology list (ETL) (www.gov.uk/energy-technology-list). Such equipment generates enhanced capital allowances (ECA), which in turn means cash back from HMRC of up to 19% of the cost of the equipment. One proviso is that the cash back is limited to the amount of PAYE payments made by the company.
Equipment that qualifies for ECA includes over 16000 items. Some categories of this equipment include:
Biomass Boilers and Room heaters
Combined Heat and Power
Compressed Air Equipment
Curtains, Blinds, Doors and Covers for Refrigerated Display Cabinets
Gas-fired Condensing Water Heaters
High Efficiency Lighting Units
High Speed Hand Air Dryers
Hot Water Boilers
Portable Energy Monitoring Equipment
Radiant Heating Equipment
Refrigerated Display Cabinets
Refrigeration System Controls
Warm Air Heating Equipment