Naturally, as designers, we would rather discuss the aesthetics of a scheme than the financing of it. However, in recognition that we are business people too – this week we look at a commercial aspect that could speed up some commercial refurbishment projects. Certainly, when it comes to the lighting element of an office facelift, the renovation of a stately home, or the refitting of a school or care home – there is a great deal of funding out there from Government bodies and other agencies. In real terms, depending upon the scheme – this could pay for a switch to LED or at worst render the cost of a new lighting scheme at zero impact on a company’s cash. The trick is to act now. In these politically charged and highly volatile times – no one will predict how long these free schemes will last!
What you need to know – to tip customers off about available funding!
1. Private Sector Clients
LED lighting refurbishments qualify for the Government sponsored Enhance Capital Allowance (ECA) – claimed through a company’s income or corporation tax return.
Enhanced Capital Allowances (ECAs) are a straightforward way for a business to improve its cash flow through accelerated tax relief. The scheme encourages businesses to invest in energy-saving equipment specified in the Energy Technology List (ETL) to help reduce carbon emissions, which contribute to climate change.
LED lighting qualifies for funding, however, it is not specifically itemised on the ETL.
Customers need to obtain a statement from their lighting manufacturer, that states that the product supplied for your project, meets the eligibility criteria in force at the time of purchase. Only the most efficient 25% of products are judged as eligible. Some manufacturers are better than others in terms of identifying fundable products – have a look at Integral LED, a calculator facility on their website is extremely helpful and includes carbon savings.
How it works
An ECA is claimed through a business’s income or corporation tax return in the same way as any other capital allowance. HMRC is responsible for the tax-related aspects of the ECA scheme. Buying energy efficient equipment results in a lower overall spend on energy, improving cash flow and lowering overheads. This can be a very attractive proposition as energy use is often the second highest cost after staff salaries, and for some energy intensive industries, it can be the highest operational cost.
The Carbon Trust operated the scheme on behalf of the Government – find out more here
2. Public or Charitable Sector Clients
If your client’s organisation is in the public sector, Salix Finance provides interest-free Government funding to improve energy efficiency, reduce carbon emissions and lower energy bills within schools, hospitals and other qualifying institutions.
Salix provides 100% interest-free capital for public sector organisations across the United Kingdom to encourage organisations to take a lead in tackling climate change by increasing their energy efficiency. Their loans enable the installation of modern, energy efficient technologies by funding the replacement of dated, inefficient equipment. Hence, the refurbishment of existing ‘legacy’ lighting qualifies for funding under this scheme.
How it works
The applicant must forecast a reduction in overheads resulting from the capital expenditure. For example, a school borrows £10,000 to put in new lighting which will save the school £2,000 per annum from reduced electricity usage. For the first five years, these savings are used to pay back the interest-free loan. Once the loan is repaid, the continued savings enable the school to use the capital for other budgets, such as the purchase of equipment.
Salix funding operates for all public sector organisations across their whole estates, including schools, higher and further educational institutions, emergency services, hospitals, leisure centres, local authorities and the NHS.
Salix is a Government funded agency – find out more here
No Brainer Alert!
Why not use this to ‘leverage’ a timescale on a refurbishment project. It may seem complicated – but it is bread and butter to your average accountant and can be initiated at any time in the financial year. So next time you receive an ‘Um or an Err’ from a client – tell them to claim what is due to them – but they better act quickly in order not to miss out.
Remember the team at Orange Lighting is here to offer guidance on all aspects of a lighting scheme – we will welcome your call!
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