Feed-In Tariffs - Not only a good way of generating tax free income ....

7th Sep 2010

Feed-In Tariffs are payments to anyone who owns a renewable electricity system, for every kilowatt hour they generate. Both private and business users are eligible for such payments. By installing FITs-eligible renewable energy systems in your home or business you can make energy, make money and make a difference to the environment!

How much can you claim?

You may be entitled to claim up to 41.3p/kWhr generated, depending on the type and size of your installation.  In addition, you save on your electricity bill when you use your own energy.  You can also earn an additional 3p/kWh when you export any surplus.

For how long can you claim?

Tariffs are paid for 20 years, except solar systems which get 25 years. Tariffs are index-linked to the RPI.

What is the return?

These tariffs should cover the initial capital cost and, according to the Government, earn a return up to 8% p.a. In practice that means you should pay back the capital cost at least 2 to 3 times over the duration of the tariffs. 

When did they start?

Tariffs became payable starting in April 2010. All qualifying systems installed now are eligible.

Are there any restrictions?

The tariffs apply to all the technologies shown in sizes up to 5 megawatts (plenty for most consumers and businesses).

Is Tariff Income Taxed?

Tariffs will be exempt from income tax. This means that domestic users will not be taxed for any income received from the Feed-In Tariffs or Renewable Heat Incentive.  This is specific further advantage for individuals who are interested in installing a renewable energy installation.

Companies will be subject to Corporation Tax on their tariff income.  However, it is usually still extremely financially viable.

You should not install renewable energy on the basis of this article.  Please take specific advice.

Author: Emma Glover (emma.glover@rowlandsaccountants.co.uk)

« Back to Article List