Photovoltaics

There are a few questions around VAT, income tax and capital investment allowances on photovoltaic installations and receipts for electricity through Feed-In Tariff.

According to Chiene + Tait CA 61 Dublin Street, Edinbourgh EH3 6NL tax aspects can be viewed as Domestic and Other:

For domestic systems:
- income tax allowance (electricity revenues are exempt from income tax)
- VAT is not charged nor for generation neither for exports unless person is VAT registered in which case VAT is charged on exports
- capital allowances do not apply

For other systems:
- income from electricity sales is not tax exempt (tax on company profits apply)
- VAT on generation does not apply but VAT is charged on export of electricity to the grid
- capital allowances will apply and additional allowances will apply, depending on the company situation

According to HMRC Reference:Notice 708 (February 2008), the customer will pay reduced VAT on photovoltaic installation at a rate of 5% regardless if it is domestic or corporate.

See more info below.
VAT on Investment

Of course, by any means, talk to your accountant before you decide as I have no qualifications to reliably explain tax code and can not accept any responsibility about the actions you will take after reading this post.

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