FIT (Feed-In Tariffs)
Many individuals and businesses have installed solar PV panels. This is considered to be a good investment, and is certainly good value in terms of carbon/pollution reduction.
We are often asked about the tax implications of the Feed In Tariff (FIT)
Income tax and corporation tax on the FIT
The starting point for companies s that the FIT is generally taxable income. In a company, partnership or sole trader accounts the FIT payments will be recorded as other income. This will increase taxable profits and therefore increase the income tax or corporation tax payable.
For domestic installations FIT is non-taxable, index linked and currently guaranteed for a fixed term of 20 years.
RHI (Renewable Heat Incentive) Tariff
The RHI is a government incentive scheme designed to reward those who use renewable energy to heat their buildings. There are two phases: one for the non-domestic sector (industrial, commercial, public sector and community organisations) and one for domestic homes.
The domestic scheme launched on 9 April 2014. It offers regular 'tariff' payments for seven years to those using certain technologies to heat their homes. The amount of money that's paid depends on what technology you use, such as solar thermal (water heating) panels, heat pumps and biomass boilers (which use wood pellets, chips or logs).
The RHI supports the following technologies:
- air-to-water heat pumps
- biomass-only boilers and biomass pellet stoves with back boilers
- ground and water source heat pumps
- flat plate and evacuated tube solar thermal panels.
The RHI is similar to FIT, but supports different types of renewable technology.
The FIT pays households and communities that generate their own electricity from renewable sources such as solar electricity (PV) panels or wind turbines, while the RHI is designed specifically for technologies that heat buildings. FIT pays households for excess electricity exported out to the National Grid.