Ripple Energy wind farm?

70sbudgie

Reed_Richards said:

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.  

As one of the three opinions you've quoted, I think they look more like a progression of understanding. (Though mine should be in the middle! )

I understand the energy side of this project far more than I do the finance side and am here to improve my understanding.

What @Exiled_Tike has said makes sense to me and tweaks my understanding. I know I will have to enter a portion of the savings into my tax return (whether as dividends, interest or income), but that is a good few years away and I hope to better understand by the time I do.

What would be great, is if anyone that invested in the first turbine, that is now generating, could clarify the financial information that the dashboard provides. When that appears.

70sbudgie

I will also add, that the whole Ripple concept is contradictory to convention, which is why, imho, it is such an interesting innovation.

Exiled_Tyke

This is from the Ripple Offer document 

"From a tax perspective the trading benefit (but not the repayment of share capital) is treated
as interest. It will count towards your annual interest allowance, which means you may need to declare it as part of your tax return. "

Hence the comments I made above. A basic rate tax payer gets an annual interest allowance of £1,000 and a higher rate tax payer £500.  You've got to have an awful lot of savings to get that amount of interest currently so I can't see many Ripple 'investors' paying any tax. 


So there really should be no confusion as the offer document is explicit on the matter.  However this serves as a reminder that potential 'investors' really must read the offer document carefully and make sure they understand what they are getting into. If they don't then they should come here and ask questions. 

70sbudgie

Out of curiosity, what sort investment in Ripple would reach the £1000 interest on it's own? The current rate of "savings" is 9.5p/kWhr? So approximately 10,500 kWhr and based on the Ripple output calcs approx. 3.3KW. Could this by why the limits of investment with Ripple are what they are? I'd be interested if others get different answers.

Exiled_Tyke

70sbudgie said:

Out of curiosity, what sort investment in Ripple would reach the £1000 interest on it's own? The current rate of "savings" is 9.5p/kWhr? So approximately 10,500 kWhr and based on the Ripple output calcs approx. 3.3KW. Could this by why the limits of investment with Ripple are what they are? I'd be interested if others get different answers.

I think it's more complicated than that.   In the offer document they state that the estimated return is 4.9%. They also state that an investment of £1714 is expected to save £125 per year.  Now that equates to around 7.3%.  The difference is that some of this saving is the return of capital.  

So, I reckon  a purchase of 1kW is estimated to produce 3,172 kWh each year and will cost £1,850.   Each year 5% of the return is capital reduction so £92.50.  Using your figures above of 9.5p saving per kWh means a total 'saving' of £293 per year.  So the taxable amount is the return in excess of the £92.50 capital returned.  So to use up the entire £1,000 interest allowance of a basic rate tax payer I reckon 5kW needs to be purchased at a cost of £9,250.    But of course this is dependent on the WT's achieving exactly the estimated output and of course assumes the 9.5p saving you were working with above.   If we return to the 'expected' savings quoted by Ripple then the required investment becomes much larger. 

I'd be grateful if someone could 'sense-check' the logic of this calculation. I pretty sure I've got it right but as it's a very unusual situation I may well have missed out something vital to the calculations.   Thanks 

thevilla

Just received our £150 council tax rebate.

Just added £150 to our Ripple investment. 

chqshaitan

70sbudgie said:

Out of curiosity, what sort investment in Ripple would reach the £1000 interest on it's own? The current rate of "savings" is 9.5p/kWhr? So approximately 10,500 kWhr and based on the Ripple output calcs approx. 3.3KW. Could this by why the limits of investment with Ripple are what they are? I'd be interested if others get different answers.

Another point to consider is that if you are high tax rate payer, the amount of tax free interest drops to 500 pounds.

I remember in one of the ripple videos, that the reason for the structuring of 120%, is due to the fca. 

Exiled_Tyke

chqshaitan said:

70sbudgie said:

Out of curiosity, what sort investment in Ripple would reach the £1000 interest on it's own? The current rate of "savings" is 9.5p/kWhr? So approximately 10,500 kWhr and based on the Ripple output calcs approx. 3.3KW. Could this by why the limits of investment with Ripple are what they are? I'd be interested if others get different answers.

Another point to consider is that if you are high tax rate payer, the amount of tax free interest drops to 500 pounds.

I remember in one of the ripple videos, that the reason for the structuring of 120%, is due to the fca. 

Again I'm not sure that's an issue for many. At Ripple estimates for a higher rate tax payer  this equates to around a £9k investment  (If my figures above are correct) and at 70sbudgie's 'current rates' roughly half that.  

And do consider it's only the amount over the threshold that is subject to tax. So for a basic rate tax payer, interest of £1,200 at 20% will be a £40 tax bill.  For a higher rate tax payer interest of  £600 would result in the same £40 bill.  

Reed_Richards

I'm pleased to see that the share price of Greencoat UK Wind has increased by about 10% since I bought some shares.  You don't see that benefit with Ripple Energy - although of course the share price could easily go the other way.  It was this thread that drew my attention to UK Wind.

Exiled_Tyke

Reed_Richards said:

I'm pleased to see that the share price of Greencoat UK Wind has increased by about 10% since I bought some shares.  You don't see that benefit with Ripple Energy - although of course the share price could easily go the other way.  It was this thread that drew my attention to UK Wind.

I'm kind of liking the spread of a bit of Greencoat and a bit of Ripple.  The upside on Greencoat must be limited as most of the investment is in cfd contracts. Although some of the more recent ones are not and could benefit from higher electricity prices.