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Press Release3.3 million small businesses to be denied more generous green tax incentives3.3 million small businesses (75% of all UK business enterprises) are set to miss out on more generous green tax breaks for energy efficient investment, says UHY Wingfield Slater, the independent Sheffield City member of national accountancy group, UHY Hacker Young. Legislation for the new Enhanced Capital Allowance (ECA) scheme, published by HM Revenue & Customs (HMRC), deliberately excludes unincorporated businesses - sole traders and partnerships - from claiming new tax credits for investment in energy efficient technology. Only 10% of respondents to the consultation process on the capital allowances were in favour of the Government’s proposal to limit the new ECA scheme to incorporated businesses. UHY Wingfield Slater partner, Peter Newsam, whilst welcoming the extension of the relief, comments: “In fairness, all businesses should be eligible for these tax breaks. What justification is there to favour companies over other businesses? “Unincorporated businesses are often enterprises in the earliest stages of growth and arguably the most likely to be in need of assistance to invest in energy efficient technology. “If the Government is really serious about green tax incentives why is it denying this tax break to over 3.3 million small businesses?” He adds: “If a sole trader or a partnership wants to take advantage of this green tax break they will have to go to all the trouble and cost of incorporating. That is now a less attractive option than it used to be, as one of Gordon Brown’s last actions as Chancellor was to slap around a 16% tax hike on small businesses that incorporate, with further tax increases earmarked for small family companies next year.” The main change to the ECA scheme will be to allow loss-making companies to surrender such losses attributable to qualifying expenditure for a cash payment. Previously, companies were only able to offset qualifying expenditure against taxable income, which meant that companies trading at a loss were unable to generate any tax savings from energy efficient investment for a number of years. The cap on refunds will be £250,000 per annum per company. The scheme will cover energy efficient technology such as boilers, lighting, air conditioning units, pipework insulation, efficient taps etc. |
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