Ripple Energy wind farm?

JKenH

Nothing wrong with reconsidering your position as the situation changes - it’s good to keep an open mind. I wonder how many of us 10 years ago would have considered buying an electric car. I agree the wind farm works as a hedge against high electricity prices and hopefully it will get off to a good start with prices holding up and giving the investment less work to do in the future.

I’m still out but not because there is no investment case. I like to keep my tax affairs simple and finally have got my money sorted so that I don’t have to do an annual tax return. I am aware it has been suggested that the profit element won’t attract tax as it may fall within the interest allowance but I have been in a similar situation in the past and had to pay tax. For the savings involved I prefer to avoid the hassle. Another issue is the wind turbine will probably outlive me and I don’t want to leave my executors too many loose ends. 

Reed_Richards

JKenH said:

I’m still out but not because there is no investment case. I like to keep my tax affairs simple and finally have got my money sorted so that I don’t have to do an annual tax return. I am aware it has been suggested that the profit element won’t attract tax as it may fall within the interest allowance but I have been in a similar situation in the past and had to pay tax. ...

Surely if the profit is taxable (and it surely will be once the Revenue find out about it) then it will be a dividend.  Dividends are taxed differently to interest.

chqshaitan

Reed_Richards said:

JKenH said:

I’m still out but not because there is no investment case. I like to keep my tax affairs simple and finally have got my money sorted so that I don’t have to do an annual tax return. I am aware it has been suggested that the profit element won’t attract tax as it may fall within the interest allowance but I have been in a similar situation in the past and had to pay tax. ...

Surely if the profit is taxable (and it surely will be once the Revenue find out about it) then it will be a dividend.  Dividends are taxed differently to interest.

Hi Bud,

The profits that JKenH are referring to are generated from your profit share (net total of the difference between the elec kwh wholesale rate and the running rate of the windfarm per kwh).

So its not related to any shares, but based on income. By default you get roughly a £1000 allowance per year on any interest, so in reality, in most circumstances you will not need to pay any tax, unless you are already near or exceed the £1000 per year allowance.

70sbudgie

Again referring back to the customer agreement, (and , I think also Ripple's FAQs), the saving will be split into two parts (though paid as a single value). The part that is the share buyback is not taxed. The rest of the savings is equivalent to dividends and will be taxed. I can't remember completely, but I think that it will need to be entered as dividend for tax return purposes.

paul991

from what i read you  dont pay  tax on the first £2000 of  dividends each  year and any other shares you can put in a isa  https://www.which.co.uk/money/tax/income-tax/income-tax-on-savings-and-investments/dividend-tax-calculator-a30cd5g61pvk

chqshaitan

70sbudgie said:

Again referring back to the customer agreement, (and , I think also Ripple's FAQs), the saving will be split into two parts (though paid as a single value). The part that is the share buyback is not taxed. The rest of the savings is equivalent to dividends and will be taxed. I can't remember completely, but I think that it will need to be entered as dividend for tax return purposes.

Yea. Also you can login to your dashboard, and get the exact split in an annual statement.

 I cant remember the exact details of the profit share, but I vaguely remember ripple mentioning that they were going to discuss how exactly it would be classified with the inland revenue, not sure if has been completely determined(or not)

Reed_Richards

chqshaitan said:

Hi Bud,

The profits that JKenH are referring to are generated from your profit share (net total of the difference between the elec kwh wholesale rate and the running rate of the windfarm per kwh).

Yes, if a company makes profit it may decide to distribute some of that profit back to its shareholders.  If it does so, this is called a "dividend".  A dividend, at its most basic, is a profit-share.  Work related earnings and interest on savings are both taxed as "Income".  Dividends are taxed differently.    

chqshaitan

Reed_Richards said:

chqshaitan said:

Hi Bud,

The profits that JKenH are referring to are generated from your profit share (net total of the difference between the elec kwh wholesale rate and the running rate of the windfarm per kwh).

Yes, if a company makes profit it may decide to distribute some of that profit back to its shareholders.  If it does so, this is called a "dividend".  A dividend, at its most basic, is a profit-share.  Work related earnings and interest on savings are both taxed as "Income".  Dividends are taxed differently.    

I think that you are making a link, that does not exist. Your shares in the co-op are not directly related to what your returns will be, or in ripple energies terminology savings, as there are other factors to consider like how much kwh was generated, running costs and wholesale kwh electrical costs at the time.

this is unlike a dividend which is paid strictly based on how many shares you have at that particular time.

Exiled_Tyke

The way Ripple has set this up is pretty unusual.  Whilst investors will be buying 'shares' it appears that legally they are actually debentures as Ripple has said that the returns (in excess of capital returned) will be taxed as interest. Hence the £1,000 interest allowance applies and not the dividend allowance. As I've mentioned before, currently anyone getting more than 1% interest on savings is very lucky. So for the returns on Ripple to be taxed you need to already have around £100,000 in non-isa savings.  I can't see this as being an issue for many 'investors'. 

Reed_Richards

chqshaitan said:
 I cant remember the exact details of the profit share, but I vaguely remember ripple mentioning that they were going to discuss how exactly it would be classified with the inland revenue, not sure if has been completely determined(or not)

Exiled_Tyke said:

The way Ripple has set this up is pretty unusual.  Whilst investors will be buying 'shares' it appears that legally they are actually debentures as Ripple has said that the returns (in excess of capital returned) will be taxed as interest. 

70sbudgie said:

Again referring back to the customer agreement, (and , I think also Ripple's FAQs), the saving will be split into two parts (though paid as a single value). The part that is the share buyback is not taxed. The rest of the savings is equivalent to dividends and will be taxed. I can't remember completely, but I think that it will need to be entered as dividend for tax return purposes.

So here we have three different opinions about how payments from Ripple will be treated for tax purposes, all seemingly based on what Ripple has stated.  For reasons best known to those in charge, Ripple has eschewed convention in the way it makes its payments and thereby created a fog of uncertainty about the way these payments will be taxed.