If you have a construction project that is due to start this year and have been looking at the accelerated 100% First Year Allowances (FYAs) for energy or water efficient plant or machinery in your design you may need to revisit some of your assumptions if you wish to maintain relief.
Changes to the Enhanced Capital Allowances rules are reviewed annually and the government published its annual update as part of last year’s Autumn Statement. The Carbon Trust has now released more details and is seeking views from stakeholders by the end of February 2018. The changes are expected to come into effect later this year and more details are below.
The most widespread and significant for property is likely to be the tightening up of existing qualifying criteria for energy efficient lighting and readers should take special note of the following:-
The previous categories for White LED Lighting Units and High Efficiency Lighting Units will be merged into one sub-technology called Efficient White Lighting Units.
The government will introduce a robust increase to the required efficacy threshold of Lighting Units of over 25% to reflect the continuing improvements in efficiency.
Criteria will be developed which address the specific requirements of LED products used in illuminated signs. The criteria will feature the eligibility and performance criteria, the test and measurement standards and the technology description and definitions.
Three new sub-technologies are also proposed: –
Evaporative Air Coolers to be added as a sub-technology in the Heating, Ventilation and Air Conditioning (HVAC) category – Evaporative air coolers are used as an alternative to packaged chillers to provide conditioned, cooled air to commercial buildings, industrial processes and data centres. They have the potential to deliver significant carbon savings.
Saturated Steam to Electricity Conversion Equipment to be added as a sub-technology in the Waste Heat to Electricity Conversion Equipment category – Recent technological developments have allowed the development of products that can generate electricity from lower quality steam that is not suitable for use in a conventional steam turbine generator. They have the potential to deliver significant carbon savings
White LED Lighting Modules for Backlit Illuminated Signs to be added as a sub-technology in the Lighting category – This lighting sub-technology will be a listed category – White LEDs offer significant energy savings for backlit illuminated signs, over other sources of lighting.
Two sub-technologies are proposed for removal: –
Biomass Fired Warm Air Heaters (a sub-technology of Radiant and Warm Air Heaters)
Localised Rapid Steam Generators (a sub-technology of Boiler Equipment)
The qualifying criteria for a further eight sub-technologies will be revised: –
Air Blast Coolers
Air Source Gas Engine Driven Split and Multi-split (including VRF) Heat Pumps
Automatic Monitoring & Targeting Systems
Burners with Controls
Evaporative Condensers
Hot Water Boilers
Waste Heat to Electricity Conversion Equipment
Uninterruptible Power Supplies
When the qualifying conditions are met, expenditure on energy saving plant or machinery can qualify for FYAs when the expenditure is incurred, or when the contract for the provision of the plant or machinery is entered.
If you are affected by any of the changes or would like more details, please do not hesitate to get in touch.