Finance Bill Tracking Service 2010 | Budget 2010


Who is likely to be affected?

1. Businesses purchasing designated plant and machinery which is energy efficient, reduces water use or improves water quality.

General description of the measure

2. The Energy Saving and Water Efficient (environmentally beneficial) Enhanced Capital Allowance (ECA) schemes allow businesses investing in designated technologies that reduce energy consumption, save water or improve water quality to write off 100 per cent of the cost against the taxable profits of the period during which the investment was made.

3. This measure amends the lists of technologies covered by the schemes.

Operative date

4. The changes to the schemes will have effect on and after a date to be appointed by Treasury Order to be made prior to the summer 2010 Parliamentary recess.

Current law and proposed revisions

5. Capital expenditure by business on plant and machinery normally qualifies for tax relief by way of capital allowances, usually given at the rate of 20 per cent a year on a reducing balance basis.

6. Two schemes exist that provide 100 per cent first year allowances for expenditure on certain energy-saving and water efficient technologies. The qualifying technologies are published in the Lists: the Energy Technology Criteria List and Water Technology Criteria List. Every year these lists are reviewed by the Department of Energy and Climate Change (DECC) and the Department for Environment, Food and Rural Affairs (Defra) respectively, to ensure that the qualifying technologies, and the criteria that technologies must meet if they are to qualify for the relief, are still relevant.

7. Following this year's review, the energy efficient scheme List will be revised to include two new sub-technologies: Permanent Magnet Synchronous Motors and Biomass fired warm air heaters. One existing technology (Compact heat exchangers) and one sub-technology (Liquid pressure amplification) will be removed. The criteria for taps and showers in the Water Efficient scheme will be tightened. Minor housekeeping changes will also be made to the existing criteria of both schemes.

8. All revisions will be incorporated in new Lists which will be published later in 2010 by DECC and Defra. Once these have been published, a Treasury Order links them to the schemes. The Lists are available on the internet at

Further advice

9. If you have any questions about this change, please contact Nick Williams on 020 7147 2541 (email: Information about Budget measures is available on the HM Revenue & Customs website at