The government has taken a fair bit of flak in recent months for its willingness to propose corporate taxes for firms that pollute while refusing to be drawn on incentives for those firms that embrace environmentally sustainable practices.
However, the issue is not quite as clear cut as some business lobbyists have made out. Did you know, for example, that there is already a major tax break in place for firms that deploy energy efficient technologies?
Don't worry if not, because as reported in IT Week today you are certainly not alone. According to datacentre services firm Comtec Power, many IT and facilities directors are completely unaware of the incentive despite the fact that much of the equipment used in their datacenters and office buildings - such as air conditioning, heat and power systems, lights, cooling devices, insulation and environmental monitoring systems - could qualify for tax relief.
Under the scheme, there is a list of over 9,000 technology products all of which promise to deliver enhanced energy efficiency to firms' facilities. Many of these products also qualify for an Enhanced Capital Allowances (ECA) tax break that permits the purchaser to deduct 100 percent of the capital expenditure and associated installation costs against taxable profits. The ECA can be claimed as part of normal income or corporation tax returns calculations.
The Carbon Trust, which runs the scheme on behalf of DEFRA, argues that it allows firms to improve their cash flow and shorten the payback period for the investment. Its calculations show that a firm spending £10,000 on qualified products and paying 30 percent tax could reduce its tax bill by £3,000 in the year of investment.
The list is also updated monthly as new energy efficient products reach the market.
Smaller firms that may still balk at the investment in new equipment can apply for interest free loans of up £100,000 from the Carbon Trust.
It is a scheme that the government, currently under fire from the Tories for not taking enough action to create a strong regulatory and tax framework for businesses to embrace green practices, would do well to publicise far more aggressively.
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