Environmental Update (August 2009)

Environmentally Beneficial Plant & Machinery

In 2003 the Government introduced new capital allowances treatment for plant & machinery which was seen as being beneficial to the environment, particularly in relation to reduction in water usage.

The plant & machinery has to meet certain criteria and be on the Water Technology Product List. The Water Technology Criteria are split into classes being:

• Efficient taps;
• Efficient toilets;
• Flow controllers;
• Leakage detection;
• Meters;
• Rainwater harvesting equipment
• Efficient washing machines;
• Small scale slurry and sludge dewatering equipment
• Vehicle wash water reclaim units
• Efficient industrial cleaning equipment
• Waste management for mechanical seals.

The full list of products within these classes can be viewed at http://www.water-eca.gov.uk/ and is updated regularly to include new technologies and equipment.

A 100% first year allowance (FYA) can be claimed on expenditure on plant and machinery that appears on the list.

Where equipment is purchased that is not environmentally beneficial plant & machinery in itself but includes components that appear on the list you may separate the expenditure so as to identify the proportion of the total expenditure on which the 100% FYA can be claimed.

If the expenditure is incurred in stages, FYA should be claimed as each stage payment is made thus the FYA available can be claimed over more than one year, i.e.:

£100,000 qualifying plant & machinery to be installed over a period of 18 months with payment of £75,000 on commencement and £25,000 on completion.

£75,000 FYA could be claimed in the first financial year when expenditure is incurred with £25,000 FYA claimed in year 2.