Renewable energy generation systems including solar panels, wind turbines etc with a capacity of up to five megawatts are eligible under the new FITS scheme. The tariffs are divided into two categories; “generation” that is paid on the total output of the renewable energy system and “export” that is paid for surplus electricity your system exports to the electricity grid.
Are FITs taxable? (beware of misleading sales literature)
The exemption from income tax that many farmers have heard about is for domestic properties only. This means for companies and other businesses, the income is taxable as the electricity used is for non-domestic purposes.
The plant element of the cost of the microgeneration system will be eligible for capital allowances if purchased by a business. Depending on the system, enhanced capital allowances may be available. Please note if the investment is done privately, capital allowances will not be available.
If registered, VAT can be recovered on the purchase of the equipment. VAT should however be charged on the export FITs, but not on the generation FITs that are outside the scope of VAT.
For more information or to arrange a free consultation please contact:
Jonathan Crowther FCA or Sophie Howard ACA at
Pershore (01386 552644) or Ledbury (01531 631500)