What is the VAT rate for solar PV installations?

The purchase and installation of solar PVs are subject to Standard rated VAT (20%). However, all VAT is recoverable as long as taxable supplies are being made with the solar PVs. The Feed-in-Tariff consists of two tariffs, the generation tariff and the export tariff.

Are solar panels taxable?

Often the electricity is used by the business operating out of the property with excess electricity bring sold to the National Grid. Any receipt from such a sale is taxable. Tax relief is available on the cost of production including the capital costs of installing solar systems.

What is solar photovoltaic tax relief?

Since 2012 solar photovoltaic systems have been classified as items which attract an 8% annual writing down allowance tax relief. Also since 2012 the rate on which allowances can be claimed for any asset generated income under the feed in tariff is 8%. This compares to rates of up to 18% for tax relief on assets in other industries.

Do I have to pay income tax if I generate electricity?

Where the generation tariff is received by an individual, other than in a business capacity, and it is not chargeable as miscellaneous income, no Income Tax liability will arise. This will usually be the case where an individual generates electricity mainly for use in their own home.

Is a sale of a solar system taxable?

Any receipt from such a sale is taxable. Tax relief is available on the cost of production including the capital costs of installing solar systems. The typical installation has a reasonable set up cost and then generates income which has low cost of production.

Are solar panels tax-deductible?

For pension purposes, solar panels might be considered tangible, moveable property, which could result in a penal tax charge. Additionally, if electricity is sold, HMRC might deem that the pension scheme is trading, leading to tax charges.