Going green: Turn eco-friendly technology into Capital Allowance tax relief

Date: August 30, 2022

Going green is a major ambition for many UK businesses who want to play their part in the transition to net zero.

In the long run, it can make economic sense too, as investing in greener technology helps save companies money on their energy bills.

Businesses can even get money back on what they spend on the green technology and equipment that helps them make the transition. This comes through a form of tax relief known as Capital Allowances.

In a nutshell, Capital Allowances offset the hidden expenditure in your commercial property.

It covers almost everything that would remain in the building if you tipped it upside down — such as air conditioning, wiring, heating, lighting and security systems.

But while those are the most common types of plant and machinery included on claims, green technologies are increasingly becoming a feature as more businesses install them in their commercial premises.

The types of environmentally-friendly technologies being claimed for include those you already associate with going green, such as solar panels and heat pumps.

It can also include less well-known technologies such as solar thermal collectors, which are most commonly devices using solar power to heat water. Waste heat to electricity conversion equipment — which can turn waste heat from an industrial process into power — can also be eligible, as can battery storage equipment.

Smaller pieces of equipment are also being used to make green gains in commercial property. Energy efficient hand dryers and energy efficient lighting would tick the boxes for what can be claimed for under Capital Allowances.

There are also special rules for the installation of electric vehicle charging points. Businesses of all sizes can claim 100% on the capital expenditure of buying electric vehicle charging points in the first year after purchase.

Eligible expenditure can include the charging point itself, alteration of the land for the purpose of installing the charging points and any plant or machinery installed to provide the charging point with the necessary supply of electricity.

There are also special rules for Capital Allowance claims on electric cars with zero emissions, as a first year allowance.

With different types of allowance relating to a wide range of items and accounting periods, Capital Allowances can be confusing and it is easy to underestimate what is eligible. If you are installing any green technologies in your commercial property, check with our team of experts to see if it is eligible.

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