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IS THE SALE OF SOLAR POWERED ELECTRICITY TO ELECTRICITY COMPANIES TAX FREE INCOME

IS THE SALE OF SOLAR POWERED ELECTRICITY TO...

A client of mine has had solar panels fiited to his business premises. He sells excess electricity to electricity providors. is this tax free income. If it isn't then can he claim the cost of the solar panels

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08th Jul 2012 14:27

Generally taxable

The starting point is that the FiT is generally taxable income. In a company, partnership or sole trader accounts the FiT payments should be recorded as other income.

Depending on whether they are solar thermal panels or solar photovoltaic panels, your client will either get 100% capital allowances under the ECA scheme, or not, respectively. If the ECA scheme doesn't apply then this doesn't preclude a normal AIA claim.

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08th Jul 2012 15:01

and VAT

He can also claim the input VAT on the cost of the panels/installation and account for output VAT on the export tariff.  VAT does not apply to the feed in tariff.

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By plummy1
08th Jul 2012 22:35

Capital Allowances Claims

I believe that PV panels are classified as as long life assets and as such the cost can be pooled into the special rates pool with a WDA of 8%. As mentioned above the AIA could be utilised to cover all or part of the cost.

Regards

John

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