There are a wide range of grants available for businesses looking to invest in new, energy efficient LED industrial lighting projects. These range from local ERDF grants to Carbon Trust grants to Enhanced Capital Allowances (ECA).
Most grants such as those from the ERDF Regionally obtained grants are available to Small and Medium Enterprises (SMEs). There are certain criteria attached which you need to meet to ensure your eligibility as an SME. They each have upper and lower funding limits to ensure a fair spread of grant provision between eligible projects. The ECA scheme, however, is open to all businesses regardless of their size or project size.
Financial assistance is important for SMEs as the initial cost can be the barrier which prevents businesses from investing in quality LED lighting technology. However, with the available funding options, businesses can now afford high quality LED lighting which can save businesses up to 80% in energy savings. This also works towards the UK’s carbon reduction targets.
Types of Funding
ERDF Regional Funding
European Regional Development funds (ERDFs) are available in selected regions. Once again the client must be an SME to qualify. Application requirements may differ from region to region so please check the relevant website for funding contributions and application requirements. Grant provisions vary, please check with your local provider.
Enhanced Capital Allowance
Enhanced Capital Allowances are provided via a business’s tax return. The products should meet the standards set out by the government’s ETL list. Businesses should also include all supporting documents provided by the supplier regarding the ECA. This enables you to write off the whole cost of the project against taxable profits. If you spend £10,000 you would reduce your tax bill in the year of purchase by £2,000 (corporation or income tax rate of 20%). Click here for further information.
Can I apply all three funding options at once?
Yes, that is allowed in theory. However, please check with your accountant or HMRC to ensure the specific ERDF Regional funding provision complies with HMRC requirements.
Multiple Grant Breakdown Example
|Total Project Cost||Deduction %||Deduction £|
|Full Project Cost||£20,000||N/A||N/A|
|Carbon Trust Grant||£8,500||15%||£11,500|
|ECA Tax Relief||£6,800||20%||£13,200|
The above calculations are in order of requirement. Once one deduction has been applied the following deduction recognises the total project cost as the cost after the previous deduction. The larger grant should be applied first. The Enhanced Capital Allowance is submitted lastly as this is applied within your tax return.
As you can see from the example, we took the £20,000 LED industrial lighting project right down to £6,800. A saving of 66% (£13,200). If you also apply the savings you will receive from energy savings from your new, highly efficient LED lighting system (up to 80%) then you will make significant savings for your business.