Tax implications

[ash56]

Does anyone know if the FIT payments are free of tax or does the income have to be declared to the Inland Revenue?

[JohnS]

Free of tax for domestic installations.

John

[danny-solar]

If you have a domestic rental property this is not Tax free unfortunately.

[dhaslam]

Sometimes something being taxable can be an advantage.   In this case (renral property) capital allowances can be claimed  on the cost so it would save tax for years.

http://www.freesource.co.uk/blog/solar-panels/enhanced-capital-allowances-for-solar-panels

[BruceB]

That link is a bit out of date:
- from apr 12 the general WDA rate reduces from 20% to 18%
- and for technologies that are eligible for FITS the WDA will be 8%

[Ted]

FiTs payments are covered by an income tax exemption under certain conditions.

1. The system is no more than 50kW.
2. The system is installed on or near the dwelling occupied by the individual.
3. There was no intention to generate a lot more than was needed in the property.

[MarkB]

FiTs payments are covered by an income tax exemption under certain conditions.

1. The system is no more than 50kW.
2. The system is installed on or near the dwelling occupied by the individual.
3. There was no intention to generate a lot more than was needed in the property.

Is there any "agreed" definition of what is "a lot more than needed"?

[Justme]

Is there any "agreed" definition of what is "a lot more than needed"?

As they "deem" 50% export I would say that 50% extra is ok.

[Ted]

I've not heard of it being tested or queried by HMRC. The actual wording on this point is "the individual intends that the amount of electricity generated by it will not significantly exceed the amount of electricity consumed in those premises". 50% is clearly expected so maybe if you are exporting more than 75% of production on an annual basis then it might be an issue if you were unlucky enough to be investigated.