Enhanced Capital Allowances for LED Lighting​ – Upgrade your Business Lighting, tax-free

Enhanced Capital Allowances (ECAs) are a straightforward way for a business to improve its cash flow through accelerated tax relief. The scheme encourages businesses to invest in energy-saving equipment specified in the Energy Technology List (ETL) to help reduce carbon emissions, which contribute to climate change.

LED lighting qualifies for funding however, it is not specifically itemised on the ETL – because of the fast-moving nature of the technology. The technology categories of White Light Emitting Diode Lighting Units and High-Efficiency Lighting Units are covered by the ETL, but eligible products are not listed.

An ECA is claimed through a company’s income or corporation tax return in the same way as any other capital allowance. HMRC is responsible for the tax-related aspects of the ECA scheme. Buying energy efficient equipment results in a lower overall spend on energy, improving cash flow and lowering overheads. This can be a very attractive proposition as energy use is often the second highest cost after staff salaries, and for some energy intensive industries, it can be the highest operational cost.

Unnecessarily high energy use does not just cost money, it also results in excessive carbon emissions that can further add to business tax costs such as the CRC Energy Efficiency Scheme or the Climate Change Levy. This strengthens the business case for purchasing new energy efficient equipment.