The Accelerated Capital Allowance (ACA) is a government-backed scheme in Ireland designed to support businesses investing in energy-efficient equipment. By allowing businesses to claim 100% tax relief on qualifying purchases in the first year, the ACA helps reduce energy costs while encouraging sustainable practices.
Moreover, whether you’re a company, sole trader, or farmer, this initiative makes adopting energy-efficient technologies more affordable and rewarding. At SPV Energy, we are here to guide you through the process. From renewable energy systems like solar panels to electric vehicles and energy-efficient machinery, the ACA covers a wide range of equipment.
In this blog, we explain what is Accelerated Capital Allowance for Solar, how the ACA works, who qualifies, and the benefits it offers, helping you make informed decisions about improving energy efficiency in your business while cutting down on taxes.
What is Accelerated Capital Allowance for Solar?
The Accelerated Capital Allowance (ACA) is an Irish government program designed to offer tax relief to businesses that invest in energy-efficient equipment.
It is a scheme that encourages sustainable practices by allowing businesses to deduct the full cost of eligible energy-saving technologies from their taxable profits in the year of purchase.
Who Can Benefit from ACA?
The Accelerated Capital Allowance (ACA) program is designed to benefit businesses in Ireland that pay corporation tax or income tax on trading or professional income.
This initiative not only promotes energy efficiency but also reduces the financial burden of investing in sustainable technologies.
The program includes a broad range of eligible participants:
- Companies: Any legally registered business entity in Ireland can claim ACA. Whether it’s a small business, a medium-sized enterprise, or a large corporation, ACA helps reduce taxable income and encourages investment in energy-efficient equipment.
- Sole Traders: Individuals managing their own businesses are also eligible for the ACA. For example, entrepreneurs can claim tax relief on energy-saving equipment used directly in their trade, making it easier to adopt sustainable solutions without straining their budget.
- Farmers: The agricultural sector can benefit greatly from ACA, especially when investing in renewable energy technologies or energy-efficient machinery for farming operations. By offsetting the costs of equipment like solar panels or biomass boilers, farmers can improve sustainability and reduce operational expenses.
Whether you’re a company, sole trader, or farmer, the ACA program offers a practical way to invest in energy efficiency while lowering tax liabilities.
However, it’s important to ensure the equipment is new, directly used in your trade, and meets the eligibility criteria outlined by the SEAI.
Important Notes:
- The equipment must be new and owned by the business.
- Leased or hired equipment does not qualify.
- Eligibility is subject to specific terms and conditions.
How Does ACA Support Solar Investments?
For businesses aiming to invest in renewable energy but don’t know what an accelerated capital allowance is for solar?
Well, photovoltaic systems (solar panels) fall under the Heating and Electricity Provision category, which qualifies for ACA. Here are some examples:
- Solar Thermal Collectors
- Inverters
- Photovoltaic Systems
The minimum expenditure for eligible equipment in this category is €1,000.
What Are the Benefits of ACA?
The Accelerated Capital Allowance (ACA) offers significant benefits to businesses investing in energy-efficient equipment. One of the primary advantages is full tax relief, allowing businesses to deduct 100% of the cost of qualifying equipment from their taxable income in the first year of use. This immediate deduction helps reduce upfront financial burdens and supports businesses in adopting sustainable practices.
Additionally, ACA lowers taxable profits, which means companies pay less in taxes. By encouraging investment in energy-efficient and sustainable technologies, ACA not only promotes environmental responsibility but also provides a practical way for businesses to save on operational costs and improve long-term profitability.
What Types of Equipment Qualify?
The ACA program supports a wide range of energy-efficient equipment, provided it meets the program’s criteria. Below are the eligible categories:
Energy-Efficient Machinery
Heating, ventilation, or industrial process equipment designed to meet high energy efficiency standards.
Building Upgrades
Energy-saving upgrades such as insulation, efficient lighting systems, or modern energy-efficient windows.
Renewable Energy Technology
Technologies like solar panels, biomass boilers, and heat pumps promote renewable energy generation for businesses.
Electric Vehicles (EVs)
Electric vehicles and EV charging stations for business fleets are eligible for ACA tax relief.
ICT Equipment
Energy-efficient servers, network equipment, and data centre upgrades are included on the SEAI’s approved list.
Ensure that any equipment you plan to purchase is listed on SEAI’s Triple E Product Register to qualify for the ACA.
How to Claim ACA?
- Select Your Equipment: Decide on the energy-efficient equipment your business needs.
- Check Eligibility: Ensure the model is listed on the SEAI’s Triple E Product Register before purchase.
- Make the Purchase: Invest in the equipment and retain proof of purchase.
- Claim on Tax Returns: File the claim through your company’s tax return form (CT1), using the specific ACA field alongside the standard capital allowances entry.
Key Rules and Requirements
- The equipment must be new and used directly in the business.
- ACA applies to the accounting period in which the equipment was first utilised, provided it was on the approved list during that period.
- Expenditure must meet or exceed the minimum amounts specified for the relevant technology category.
Why Choose ACA Over Standard Capital Allowances?
Unlike traditional wear-and-tear allowances, which spread tax relief over an eight-year period, ACA allows businesses to claim the full cost of eligible equipment in the first year. This accelerates the financial benefits of investing in energy efficiency.
Need Assistance?
If you’re unsure about eligibility or the claiming process, consult with a tax advisor or connect with SPV Energy for guidance. Reduce your energy costs and tax bill while supporting sustainable practices for a more energy-efficient future.
Conclusion!
The Accelerated Capital Allowance (ACA) is a valuable scheme that helps businesses invest in energy-efficient technologies like solar panels while reducing tax liabilities. By offering 100% tax relief in the first year, it encourages sustainable practises and long-term savings. Whether you’re a company, sole trader, or farmer, understanding and using the ACA can significantly benefit your business.
At SPV Energy, we provide expert guidance to help you navigate the eligibility criteria, select the right equipment, and maximise your benefits. Want to step towards energy efficiency and savings?
Contact SPV Energy today for professional assistance with the ACA for solar investments.
FAQ’s
1. What is the Accelerated Capital Allowance (ACA) for solar?
The Accelerated Capital Allowance (ACA) is an Irish government scheme that provides 100% tax relief in the first year for businesses investing in energy-efficient equipment, including solar panels. It helps reduce both energy costs and taxable income while encouraging sustainability.
2. Who is eligible to claim ACA for solar installations?
Businesses operating in Ireland and paying corporation or income tax on trading or professional income are eligible. This includes companies, sole traders, and farmers, provided they use new equipment listed on SEAI’s approved register.
3. What are the rules and qualifications for the ACA?
The ACA follows the same rules as the standard plant & machinery wear and tear allowance, with 100% capital expenditure in the first year. No approval is needed for energy-efficient equipment, and normal self-assessment tax provisions apply.
4. How do I claim the ACA for solar investments?
To claim the ACA, select eligible equipment, check its inclusion on the SEAI’s approved list, purchase the equipment, and file the claim through your company’s tax return form (CT1). Include the ACA field alongside your standard capital allowances entry.
5. How does ACA differ from standard capital allowances?
Unlike standard allowances, which spread tax relief over eight years, the ACA allows you to claim 100% of the cost of qualifying solar equipment in the first year. This makes it a faster and more financially beneficial option.
6. How can SPV Energy assist with the ACA process?
SPV Energy provides expert guidance on understanding ACA eligibility, selecting approved solar equipment, and navigating the claiming process. Contact us to ensure you maximise your tax relief and energy savings through the ACA scheme.