Renewable Energy

We have guided clients through the financial aspects of projects in wind turbines, anaerobic digestion plants, biomass boilers and photovoltaic units. We take into account the following issues:

Business structure and Land ownership

Where landowners have reduced their farming activities in recent years in favour of renewables, questions may be asked about the position of the farm from a capital gains and inheritance tax perspective. Careful structuring and wording of partnership agreements to clarify ownership of assets can help to ensure the partnership qualifies as a farming business ‘in the round’ and has a better chance of qualifying for 100% IHT business property relief. Consideration needs to be given to the ownership of the underlying land where the renewables project will be installed. Complex valuations for Inheritance Tax may be needed in future years if an owner were to die. If the project was owned by the younger generation then this extra administration might be avoided.

Income and capital allowances

Consider whether income generated is trading or non-trading income as this can affect how the resulting income is assessed for tax purposes. Domestic supplies will not get capital allowances nor will the future income streams be taxable. Expenditure and any capital allowances need to be carefully considered as tax relief is available on certain technologies in the first year.

Reduced feed-in tariffs and viability

As the Feed-in Tariff rates reduce, the returns on these projects are falling but they still offer returns of 5-10% after tax - considerably more than returns from conventional farming. Long term market outlook and the tax treatment of Feed-in Tariffs, your capital outlay and any income generated all need careful consideration when assessing the viability of renewable projects. Your eligibility for R&D tax credits also needs to be taken into account. Having a tax efficient investment structure from the outset can make a huge difference.

Fordham

Unit 2 Fordham House
Fordham
Ely, Cambridgeshire
CB7 5LL
01638 724973

Baythorne End

Baythorne Hall
Baythorne End
Halstead, Essex
CO9 4AH
01440 845050

Colchester

1 & 2 Tollgate Business Park
Tollgate West, Stanway
Colchester, Essex
CO3 8AB
01206 262470

Chatteris

Crown Buildings
18 Market Hill
Chatteris, Cambridgeshire
PE16 6BA
01354 693542
Logo - Blue.png
Evolve Tax & Accountancy LLP

A limited liability partnership registered in England & Wales no. OC329908

Registered Office: Unit 2 Fordham House, Fordham, Cambridgeshire CB7 5LL

 

© 2019 by Evolve. Privacy Policy