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Exploring Renewable Energy Tax Incentives: Solar Panels and Biomass Boiler Benefits

This guide outlines key tax considerations for businesses and homeowners utilizing renewable energy sources like solar panels and biomass boilers. It covers associated capital costs, VAT implications, and available tax reliefs such as the Annual Investment Allowance (up to £500,000) and special capital allowances for solar panels. It also discusses the conditions for the Enhanced Capital Allowance scheme, which offers a 100% first-year allowance, alongside restrictions for businesses receiving Feed-in Tariff payments. Understanding these aspects is crucial for maximizing investment in renewable energy.

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Exploring Renewable Energy Tax Incentives: Solar Panels and Biomass Boiler Benefits

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  1. Renewables and Tax Sheila Robertson (BMR director) Gall Robertson CA Tweedside Park Tweedbank TD1 3TE Tel: 01896 751050 Email: sheila@gallrobertsonca.co.uk

  2. Two renewable energy sources on site: • Solar panels • Biomass boiler

  3. Taxes • Capital cost • VAT • Income

  4. Capital expenditure Capital allowances • Annual Investment Allowance • Currently £500,000 • Enhanced Capital Allowance energy scheme • 100% First year allowance BUT • Not available if tariff payments received under Feed in Tariff or Renewable Heat Incentive • Writing Down Allowances • Solar panels have special rate capital allowance 8%

  5. Domestic power generation • Installed at or near your domestic premises • Electricity generated will not significantly exceed the amount consumed (by more than 20%) • 5% VAT is charged by supplier on panel supply • No income tax on feed-in tariffs

  6. VAT • VAT at standard 20% on commercial equipment supply • Is there a private use restriction - e.g. 2/3

  7. VAT and Income Supplying fuel or power for • domestic use – 5% • Mixed supply – if 60% qualifying then all at 5% - apportion if not • Electricity less than 1000 kw hours per month then all at 5%

  8. VAT and Income (cont) Feed in Tariff • generation tariff no VAT • Export tariff output VAT Cottages - landlord • unmetered - exempt –integral part of main supply of accomodation • Metered – 5% • Impact on exempt income for partial exemption rules

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