Are you considering investing in new plant or machinery for your business? It might be worthwhile considering the tax advantages associated with certain energy efficient equipment.

Traditionally the cost of qualifying plant and machinery used in a business is written off against taxable profits in the form of wear and tear capital allowances over an eight-year period. However, in the case of energy-efficient equipment the full capital expenditure cost can be claimed in the year in which the expenditure is incurred.

The scheme, which runs until 31 December 2023, is available to both companies and unincorporated businesses that incur expenditure on eligible energy-efficient equipment for use in their trade.

The energy-efficient equipment must be:

  • New;
  • Designed to achieve high levels of energy efficiency; and
  • Must fall within one of the 10 classes of technology specified in Schedule 4A of the TCA, 1997.

Products eligible under the scheme are included in a list of energy-efficient equipment published and maintained by the SEAI. A full list of qualifying equipment can be viewed on the SEAI.

A minimum amount of expenditure must be incurred on providing the equipment. This varies with the category to which the product belongs. For example, a minimum spend of €1,000 applies to heating an electricity provision, while lighting equipment and systems carry a €3,000 minimum spend.

Electric and Alternative Fuel Vehicles

To promote greater use of low-emissions cars the Finance Act 2008 introduced accelerated allowances for “electric and alternative fuel” cars. The allowance is based on the lower of the actual cost of the vehicle or the specified amount of €24,000. As an alternative to claiming the qualifying cost of a car over the eight-year period, a business can elect to claim accelerated allowances in the year of acquisition.

For more information, please contact Niall Grant, Partner of Tax Services.