The Water Technology List (WTL)
Background
This bulletin is intended to raise awareness of the existence, location and relevance of the ETL and the WTL which are often referred to for simplicity as‘The Technology Lists’. The lists comprise the technologies and products which qualify for the UK Government’s Enhanced Capital Allowances (ECA) scheme. Also included in the lists are the energy-saving and water-saving performance criteria for each product or technology.
What are ECAs?
Enhanced Capital Allowances are a form of tax relief enabling a business to claim 100%first-year capital allow-ances on their spending on qualifying plant and machinery instead of the normal reducing balance writing down allowances of 8% for integral features and 18% for main pool plant. There are two building services-related schemes for ECAs:
Energy-saving plant and machinery
Water conservation plant and machinery
Businesses can write off the whole of the capital cost of their investment in these technologies against their taxable profits of the period during which they make the investment. This can deliver a helpful cash flow boost and a shortened payback period via both the energy, or water, saved and the allowances claimed. Alternatively a loss making business can surrender the ECA value of the loss to obtain a 19% tax credit.
ECAs are only available to investors of qualifying plant and machinery and not developers. Developers are‘traders’
and they incur revenue expenditure and not capital expenditure and so cannot claim capital allowances. However the purchaser of a newly constructed development for investment can still make use of ECAs provided they are sold unused and the purchaser is a taxpayer. This can be a valuable selling point for developers if highlighted in the marketing literature.
Interest in ECAs has been highlighted by the changes to the existing capital allowances regime which have reduced the value of allowances for many qualifying items. The introduction of Energy Performance Certificates and the Carbon Reduction Commitment Energy Saving Scheme will also promote the types of technologies that could qualify for ECAs.
Who manages the technology lists and where are they?
The lists are part of the ECA scheme which was developed by the Treasury, HM Revenue & and the Department of Energy & Climate Change (DECC). The ETL is managed and maintained by the Carbon Trust and can be found at http://etl.decc.gov.uk/. The WTL is managed by Business Link and the Department for Environment Food & Rural Affairs (DEFRA) and can be found at http://wtl.defra.gov.uk.
What technologies and products are included in the ETL? (as at 2013)
Air-to-air energy recovery
Automatic monitoring and targeting
Boiler equipment
Combined heat and power (CHP)
Compact heat exchangers
Compressed air equipment
Heat pumps
Heating ventilation and air conditioning (HVAC) equipment
High speed hand air dryers
Lighting (high efficiency lighting units, lighting controls and LEDs)
Motors and drives
Pipework insulation
Radiant and warm air heaters
Refrigeration equipment
Solar thermal systems
Thermal screens
Uninterruptible power supplies
And the WTL?
Cleaning in place equipment
Efficient showers
Efficient taps
Efficient toilets
Efficient washing machines
Flow controllers
Leakage detection equipment
Meters and monitoring equipment
Rainwater harvesting equipment
Small-scale slurry and sludge dewatering equipment
Vehicle wash water reclaim units
Water efficient industrial cleaning equipment
Water management equipment for mechanical seals
Water reuse Eligibility criteria
It is not possible to summarize the eligibility criteria here because each technology has different definitions and considerations. Most of the above technologies have specific products listed that are eligible, but others are defined by detailed performance criteria. The key technologies worthy of note which operate on a Performance criteria are Lighting, CHP, Pipework Insulation, Automatic Monitoring & Targeting equipment and Water Reuse. Qualification is generally extremely strict. To give a brief example; Lighting doesn’t merely concentrate on the lamp type used but also has very strict requirements for the lightfitting itself, having to meet high Light Output Ratios, colour rendering requirements and use high frequency control equipment. CHP and AMT equipment is also heavily guided.
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Scope of ECA claims
For products on the Technology Lists, claims will be considered for the cost of the equipment itself, and other costs directly involved in installing it. These include:
Transportation– the cost of getting equipment to the site.
Installation– cranage (to lift heavy equipment into place), project management costs and labour, plus any necessary modifications to the site or existing equipment.
Preliminary costs and oncosts– if they are directly related to the acquisition and installation of the equipment.
Professional Fees– if they are directly related to the acquisition and installation of the equipment.
Making a claim for ECAs
If investing in eligible technology claimants should submit their ECA claims as part of their normal Income or Cor-poration Tax return. The best advice we can give clients on relevant projects is to highlight the fact that their investment may be eligible, and introduce AECOM Financial & Economic Consulting to the client as early as pos-sible in the design process so that they can offer a view on the potential for worthwhile tax relief before, during and after the investment programme.
Follow-up
For further general advice on any aspect of this Bulletin please contact Andy White of AECOM Financial & Economic Consulting.
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