FiTs and tax credits

LydiaJ

Apologies if this has been asked before - I've tried searching for it but haven't found anything relevant.

I know that the FiTs from solar PV aren't taxable. However, I can't find out anywhere whether they are part of income for child/working tax credits calculations. Usually, taxable things are included and tax free things are not, but I can't find anywhere to tell me the situation with FiTs specifically.

Thanks.

Cardew

Good question!

I doubt many people will declare such income; and my gut feeling is that it is not necessary. If it should be declared, then so should the savings off your electricity bill (a benefit in kind) - and that figure is impossible to determine.

The irony is that the 'Rent a Roof' customers who delude themselves that the panels save themselves £200 pa plus, might shoot themselves in the foot.

P.S.
You could write to the HMRC for confirmation and you should have a reply by the time the FIT scheme finishes!!!

zeupater

Hi

I would tend to agree with Cardew's point regarding the FiT as I would expect HMRC guidance to be similar to the 'Rent a room' scheme, but it should be checked out.

I find the 'benefit in kind' thoughts to be quite interesting from the position that if you own the system the reduction in usage is as a direct result of the investment in a system, whilst in a rent-a-roof scenario the scheme operator allows the householder to 'utilise' the energy generated by their system for free as part of the installation contract .... I would have thought that this would definately classify the value of energy used as being a 'benefit in kind', so it's worth checking as a separate query in cases where both 'rent-a-roof' and tax credits apply .....

Note for scheme operators or RAR customers .... has anyone checked this with HMRC ?

Interesting .....
Z

Cardew

zeupater wrote: »

Hi

... I would have thought that this would definately classify the value of energy used as being a 'benefit in kind', so it's worth checking as a separate query in cases where both 'rent-a-roof' and tax credits apply .....

Note for scheme operators or RAR customers .... has anyone checked this with HMRC ?

Interesting .....
Z

If the 'benefit in kind' applies, then for Rent a Roof customers it surely should be declared for all taxation - not just tax credits.

If I rent out my garage, I should declare that as income. Does it not follow that renting my roof should also be declared as income?

Of course the plus side is that you might be able to claim for any repairs to your roof! Income only £30 a year and claim tax allowance for a new roof costing £;)10,000

LydiaJ

Thanks for your replies so far.

I'll try asking on the benefits and tax credits board, and report back here to let you know what they say.

ETA This is the answer I got over there:

HappyMJ wrote: »

The income from FitT's are completely ignored for tax credits and even ignored for benefits purposes. It is not considered an income at all. So even if you were getting a means-tested £67.50 per week JSA and £50 a week FiT's then the Fit money will not reduce the JSA payment.

It's made me think about it. Spending £12,000+ on a system is also not considered deprivation of capital (you still technically have it but it's a panel on your roof instead of cash). So if were working and near retirement and had too much cash you could buy panels then claim pension credit benefits at a point in the future without worrying about the money you spent or the money your get in FiT payments.

Cardew

Can HappyMJ's statement be supported by an authoritative source? i.e. is it just his/her opinion or guidance from HMRC?

Does it apply to purchasers of a system and Rent a Roof customers.

HappyMJ

Cardew wrote: »

Can HappyMJ's statement be supported by an authoritative source? i.e. is it just his/her opinion or guidance from HMRC?

Does it apply to purchasers of a system and Rent a Roof customers.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM40520.htm

http://www.rightsnet.org.uk/forums/viewthread/536/#1949

You can always e-mail the tax office if you want to clarify the situation for yourself.

It's actually quite interesting to read if you generate 20% more than you consume then it doesn't apply. However, I don't believe they are going to check the details on your import meter and export meter too closely.

grahamc2003

HappyMJ wrote: »

http://www.hmrc.gov.uk/manuals/bimmanual/BIM40520.htm

http://www.rightsnet.org.uk/forums/viewthread/536/#1949

You can always e-mail the tax office if you want to clarify the situation for yourself.

It's actually quite interesting to read if you generate 20% more than you consume then it doesn't apply. However, I don't believe they are going to check the details on your import meter and export meter too closely.

Hang on - your first link shows fits are not liable to income tax (that was never disputed), and your second link indicates they ARE taken into account for some means tested benefits (if what the blog says is correct), Afaiia, tax credits are means tested, which was the ops question.

Email rec’d from the DWP press office on the subject:
“Hello Lee,
If somebody gets actual income from these arrangements then they’ll need to declare it and it will be taken into account in any income-related benefits they receive .
It seems Pension Credit is different because it only takes account of specific types of income which are listed in regulations, and these feed-in tariffs are not mentioned.
Hope that clarifies.”
Many thanks Ariadne for your response, I think this falls in line with your thoughts on the subject.
Cheers again

LydiaJ

The plot thickens....

OK, so we all know that tax credits are a benefit by another name, but the fact still remains that they're administered by HMRC not the DWP. I don't think it's at all safe to assume that the two systems will have the same rules.

I'll try ringing the TC helpline. I bet the minion answering the call doesn't know the answer, though.
ETA I got through on the helpline (eventually). The person who answered spent a little while trying to find out - had never heard of FiTs at all - but eventually came back with the conclusion that anything that's exempt from tax doesn't have to be included.

PS HappyMJ Thanks for your reply. I've "thanked" your post over on the benefits board. I've got another question there now, about children's pensions. Do you know anything about the TC implications of those?