Tax on individual solar power generation

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.

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.

Is the cost of solar panels tax-deductible?

If a business acquires solar panels on Hire Purchase (HP), it can claim a tax deduction for the interest paid each year, but not the capital cost. The accounting treatment of an asset bought on HP is as if it were purchased outright.

Is a generation tariff liable for income tax?

A generation tariff received in a private capacity, which is not chargeable as miscellaneous income, will not be liable to Income Tax but the reduced cost of electricity should be reflected in the cost of electricity attributed to business use. An export tariff is payable for electricity exported to the wider energy market.

What VAT rate should I pay for solar energy?

The sale of solar energy to third parties is subject to either standard rated or reduced rated (5%) VAT depending on the customer. If the operator of the solar PVs receives the export tariff or sells the energy to third parties, then all the VAT incurred is fully recoverable.

What is the capital gains tax rate for solar PV?

Capital gains tax will be payable at 28% on any gain from the disposal of the land/buildings on which solar PV is installed. This is subject to potential relief.