FITs and tax

[Martin Dawes]

Does anyone know how businesses deal with FITs? Are they still free from tax?

 

[Markc]

I think currently yes but plans are a foot to limit it to £900. But I will double check as now I've said that I think it may be domestic.

 

[Markc]

Tax. Clear as mud!

Business MAY be liable for corporation tax on the income from FITs. But what if they are not LTD company?

Best thing to do. Ask a accountant. I may email mine now!

 

[Idium]

Tax treatment of personal income under the FIT scheme relies on sections 20 & 21 of the finance act 2007. Further to this, the statements made in the pre-budget report 2009 set out that income arising from FIT tariff or Renewable Heat Incentive shall be considered the same as that arising from electricity sales as defined in the act.

For clarity on the definitions the act reads

20 Income tax exemption for domestic microgeneration
(1) In ITTOIA 2005, after section 782 insert—
“782A Domestic microgeneration
(1) No liability to income tax arises in respect of income arising to an individual from the sale of electricity generated by a microgeneration system if—

(a) the system is installed at or near domestic premises occupied by the individual, and

(b) the individual intends that the amount of electricity generated by it will not significantly exceed the amount of electricity consumed in those premises.

(2) In subsection (1)—
“domestic premises” means premises used wholly or mainly as a separate private dwelling, and
“microgeneration system” has the same meaning as in section 4 of the Climate Change and Sustainable Energy Act 2006.”

It therefore follows that any site that was not in proximity (i.e. linked to the meter of) a domestic premises or any installation that produced significantly more energy than consumed in those premises would not qualify for this exemption and any income derived from such a site would be subject to income tax at the appropriate rate to that taxpayer.

Presuming the array is on your house (if it isn't then you must pay tax) then you can claim the FIT as your personal income, exempt from tax and no need to declare it on a tax return. If you install a site specifically to earn money from the FIT, you will b liable to tax.

 

[Martin Dawes]

Thanks for the info.

Does this deal with FITs though? It seems to me that this is referring to exported electricity income rather than the tariff itself.

 

[Idium]

Yes, the legislation refers to the sale of electricity but was extended to cover income derived from FIT or RHI income in the 2009 budget