Following on from my other topic, the same client has had solar panels fitted on one of the homes, she has now generated £500.00 of income from them, I have been told that the income is non taxable for 25 years so if this is the case am I correct in not including it on the tax return this year or do I need to show it somewhere maybe in the additional information?? has anyone else had this before??
I am fairly sure that the income is only non taxable if the solar panels were purchased privately, with all associated costs NOT put through the business, with no VAT reclaimed and the panels are connected to the purchasers main private residence. I have a similar situation myself with a client who has had a wind turbine installed on his property which is used as his business premises as well. We worked out which was more cost effective, to put through the business and pay tax on the income, or to buy privately himself and not claim any of the costs incurred. It was way more cost effective to buy through the business. It is important that this is checked, if the houses are rented out on a business basis and the panels are installed on a rented property that is not lived in by the purchaser, the chances are that it is taxable income. Am more than happy to be corrected on this, but would assume that solar panels and wind turbines are all part and parcel of the same renewable energy rules. Simple rule I think would be that if the business uses any of the costs of the panels (including the installation) to reduce its own tax liability then the income generated is taxable.
The solar panels have been added to the fixed asset register so the cost will be claimed as a deduction for capital gains tax purposes if the property is sold.
I have since found some information that if the solar panels are fitted to a private residence, this income will be tax free, but businesses and landlords that rent out the accommodation need to be aware that their payment will been seen as taxable income, subject to income tax or corporation tax as appropriate.
I think my client is under the impression that this is tax free income for 25 years, better break it to her gently
