Ripple Energy wind farm?

Exiled_Tyke

Whilst I"m not pleased with the stance of HMRC there's no real disappointment here. As far as I can make out there is no change from the information we were given in the offer documents for each project.  And overall the impact on the vast majority of investors will be very small.  Around half of the annual returns will be treated as return of capital and then the remainder will only be taxed if it is above the interest allowance.  A basic rate taxpayer receiving a generous 4% interest on their savings will need to have £25,000 worth of savings earning that rate to use up their annual interest allowance. (A higher rate tax payer would need £12,500 of savings).   I estimated that for a Kirk Hill investor with £1,000 invested. For the first year the estimated taxable earnings come to around £69. If they have no interest allowance left this creates a tax bill of about £14.   If they haven't yet received £1,000 of savings interest then the £69 can come out of this.   I'm not going to have sleepless nights over these kind of figures. 

Coastalwatch

QrizB said:

Received an email from Ripple with slightly disappointing (but unsurprising) news regarding the tax treatment of Ripple payments.

As you may know we have been engaging with HMRC and HM Treasury regarding the tax treatment of Ripple members' savings for a number of years. Following back and forth between
Ripple, HMRC and James Cartlidge, Exchequer Secretary to the Treasury, HMRC came to the view that the ‘trading benefit’ of members’ bill savings should be treated as interest income. We then wrote to the Treasury asking that they introduce a tax relief on the trading allowance, like that which is available to home solar income and savings. They have, however, declined to create such a tax relief.  

We want to stress that the vast majority of Ripple members will not face any tax on their bill savings, with or without a tax relief.  

The trading benefit would only be subject to tax where a member breaches their annual interest allowance. The vast majority of people do not reach their annual allowance, so would therefore not be liable for any tax on their trading benefit.

So, Ripple trading income will be treated as interest and will be taxed as such. If your annual interest payments are less than the various allowances, they will remain untaxed; otherwise, they will be taxed at your marginal rate.

I can see me having to bump up my pension payments again when Kirk Hill comes on line!

The consolation being that with the opportunity of wrapping up both savings and Stocks/Shares into ISA's at the rate of £20k/year then with a bit of fore thought the average person can have all their capital safely tucked away from the eye's of the chancellor leaving the benefit from Ripple shares mostly untaxed. 

Admittedly those on higher incomes are likely to be affected more due to their smaller tax free allowance. Thankfully? I never achieved those dizzy heights of income during my half century at work so content in the knowledge that the allowance apportioned to me will leave the entire return intact. 

Reed_Richards

I keep repeating that if Ripple wasn't so keen or being different they would issue dividends like any ordinary company does and you have a separate tax free allowance for dividends.

Also, Ripple cannot possibly know the financial situation of "the vast majority of Ripple members".  If you have enough spare cash to take a punt on Ripple then perhaps you also have £20,000 in a savings account earning 5% interest and bang goes your £1000 worth of tax free interest.     

70sbudgie

Ripple might not know the financial situation of their members, but they do know how much each member has invested. And can therefore calculate the median interest savings of their membership (and standard deviations etc). As described above, that interest is probably in the £10s rather than £100s and therefore if it were to take someone over the £1000 threshold, they would have a good idea of the worse case financial impact.

Edit: they being Ripple.

Reed_Richards

70sbudgie said:

Ripple might not know the financial situation of their members, but they do know how much each member has invested. And can therefore calculate the median interest savings of their membership (and standard deviations etc). As described above, that interest is probably in the £10s rather than £100s and therefore if it were to take someone over the £1000 threshold, they would have a good idea of the worse case financial impact.

Edit: they being Ripple.

But that not what Ripple says.  They're just talking through their hats when asserting that the majority of their members will not have to pay tax.  They're assuming that their members are representative of the adult population and I very much doubt that to be true.  

Exiled_Tyke

Reed_Richards said:

I keep repeating that if Ripple wasn't so keen or being different they would issue dividends like any ordinary company does and you have a separate tax free allowance for dividends.

Also, Ripple cannot possibly know the financial situation of "the vast majority of Ripple members".  If you have enough spare cash to take a punt on Ripple then perhaps you also have £20,000 in a savings account earning 5% interest and bang goes your £1000 worth of tax free interest.     

On the other hand for reasons which I don't need to go into I'm an investor who has no dividend allowance left but has plenty of interest allowance.  

For Ripple to have agreed a fairly unusual tax regime suggests to me that they looked at the alternatives and made an informed decision as to which was the most efficient set-up.  If this had been done as a straightforward share offering then for some investors all returns could have been liable for tax, there would be no  tax allowance for the erosion of capital which is a natural aspect of these schemes and no exit route other than an expensive liquidation at the end of each project.  

Ripple have been open and honest about the tax treatment of investments. HMRC's stance has not changed so the information we were given is still applicable.  So as I see it  Ripple have done nothing wrong.  Each investor gets to consider the offer document and make their choice. If you want dividends then buy shares in a wind turbine investment company such as Green Coat. (This is not a recommendation nor advice, just putting out there that such investment opportunities exist). 

paul991

Has anyone had  a look at this as a alternative https://www.thriverenewables.co.uk/for-investors/

Martyn1981

paul991 said:

Has anyone had  a look at this as a alternative https://www.thriverenewables.co.uk/for-investors/

I've got a 7yr Thrive Renewables bond investment maturing in Mch 2024, so have recently had an e-mail from them mentioning the share offer. Can't make any recommendations, but it went fine, if that helps.

Habitual_Saver

Hello, I am aware of the new decision by the government regarding interest and tax concerning Ripple, but given the current economic situation, I wonder how unemployment and eligibility to benefits would be affected by Ripple share ownership.

NedS

Habitual_Saver said:

Hello, I am aware of the new decision by the government regarding interest and tax concerning Ripple, but given the current economic situation, I wonder how unemployment and eligibility to benefits would be affected by Ripple share ownership.

Not sure about other means tested benefits, but for Universal Credit, taxable income (interest) payments from capital are ignored. On UC you declare the capital/assets, and that is what is taken into account. In a case like Ripple, a decision maker would have to decide if you have access to that invested capital (can you reasonably withdraw / sell your investment in Ripple?), and if not would likely disregard the capital invested. But you would need to declare it like you would shares in any other company for DWP to decide.