Salary sacrifice for solar panels 6 March at 12:27PM in Cutting tax 6 replies 394 views

Jessss

Hi. 

We are looking at getting solar panels for our house, and I’m wondering if it’s possible to purchase them through the company I work for and pay them back through salary sacrifice?

Has anyone found any information on this?

I’ve read a few things that suggest that it is possible, but I can’t find anything definitive.

Thanks 

kinger101

No, you can't.

Jeremy535897

Technically I suppose you can sacrifice salary for any reason, but I am wondering what the point is. If your idea is that you can pay the amount concerned net of VAT, the answer is no. If the company claimed input tax, it would have to charge it on to you, because you will own the installation. If your idea is that you could avoid employee NIC payments by having it treated as a non-cash benefit, again the answer is no. The problem is that the company is either buying the panels and selling them to you, or the company is settling your liability. Either way, if something goes wrong with the installation, you may not have the benefit of the warranty, because the installation may remain in the company's ownership in the eyes of the supplier. You may also find that there is a loan from the company, as I assume that the salary sacrifice would be over a period of time, which may itself be subject to a benefit in kind charge, depending on the amount involved.

Jessss

Ok. Thanks for the info. Not sure I fully understand it all though.
There is no VAT on solar panels at the moment, it would be for the income tax and national insurance savings. 

Why would it be any different from buying an EV through salary sacrifice though? Or cycle to work scheme? 

Surely, if it isn’t already possible, the Government should introduce it as an incentive for green energy! Plus it’s an extra incentive to get more people on board with EVs. 

etienneg

What taxes (including NI) are applied, and where, is a political decision. As you say, there is already relief from VAT on solar panels as an incentive to adopt this form of 'green energy' production.

I suspect there is a link (at least in some politicians' thinking) between travel to work and green methods of transport (EV or cycle). Those who don't work can't benefit from salary sacrifice, so this incentive doesn't apply to pensioners, for example.

My view (and I stress that this is only a personal opinion) is that our tax system is hugely over complicated by all these incentives being applied in different ways, which means it costs far too much to administer and leads to delays. Even more basically, different forms of income are taxed at different rates. I can't see why those with a high income from investments (for example) are taxed less heavily than those with the same income from employment. The ecomomy needs both capital and workers, and I would treat both on an equal basis. But we are where we are!

Jeremy535897

I had forgotten the temporary VAT reduction on domestic solar panel installations, but I am not sure how it would work where a company buys an installation on behalf of an employee. It looks all right, but it introduces an undesirable complexity.

If the company is paying for a solar panel array that will be invoiced to you, then I would suggest that the company structures it by making you a beneficial loan, you buy the array with the loan, and the company collects repayments of that loan out of your after tax salary. It may be below the de minimis limits for benefit in kind rules. I am assuming you (or someone connected to you) are not a shareholder in the company. Otherwise the full amount is taxed on you as pay when the company pays the bill.

Salary sacrifice arrangements most typically apply to pension contributions, where the company makes the contribution in its own name as employer, and you take a reduced salary for it doing so, or certain special cases like electric vehicles and bicycles. See:
https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye
https://www.drewberryinsurance.co.uk/employee-benefits/salary-sacrifice-electric-car-schemes/hmrc-tax-salary-sacrifice-electric-car-schemes

twopacman

Jessss said:

Hi. 

We are looking at getting solar panels for our house, and I’m wondering if it’s possible to purchase them through the company I work for and pay them back through salary sacrifice?

Has anyone found any information on this?

I’ve read a few things that suggest that it is possible, but I can’t find anything definitive.

Thanks 

hi @Jessss
Our company is looking into this at the minute. We're a fleet though (i.e we use our vehicles for work) i your vehicle just for personal use?