Can you run an all electric house for free?

JKenH

A Telegraph reader asked about tax on income from solar panels and the Telegraph tax expert advised a s follows: 

‘I earn money from my solar panels – do I have to declare it to HMRC?’

…. we have some specific guidance from HMRC on the tax treatment of income derived from domestic electricity generation at BIM40510 in what is referred to as “domestic microgeneration”. This guide states that where the generation tariff is received by an individual capacity, rather than as part of a business, no income tax liability will normally arise. This will typically be the case where an individual generates electricity mainly for use in their own home where the system is installed close to the home.

The guide BIM40520 goes further by confirming an exemption from tax in the following terms: “in general, a householder who does not intend to generate an amount of electricity more than 20pc in excess of their own domestic needs is unlikely to be regarded as intending to significantly exceed the amount of electricity consumed in their own premises”.

https://www.telegraph.co.uk/money/tax/news/earn-money-solar-panels-declare-hmrc/

It is interesting that the article refers to “ where an individual generates electricity mainly for use in their own home where the system is installed close to the home.” I believe there has been some discussion in the past on the Ripple thread reference the “more than 20pc in excess of their own domestic needs”. This would suggest that the Ripple income would be taxable (subject to the £1,000 exemption) while your own generation is not. 

NedS

JKenH said:

A Telegraph reader asked about tax on income from solar panels and the Telegraph tax expert advised a s follows: 

‘I earn money from my solar panels – do I have to declare it to HMRC?’

…. we have some specific guidance from HMRC on the tax treatment of income derived from domestic electricity generation at BIM40510 in what is referred to as “domestic microgeneration”. This guide states that where the generation tariff is received by an individual capacity, rather than as part of a business, no income tax liability will normally arise. This will typically be the case where an individual generates electricity mainly for use in their own home where the system is installed close to the home.

The guide BIM40520 goes further by confirming an exemption from tax in the following terms: “in general, a householder who does not intend to generate an amount of electricity more than 20pc in excess of their own domestic needs is unlikely to be regarded as intending to significantly exceed the amount of electricity consumed in their own premises”.

https://www.telegraph.co.uk/money/tax/news/earn-money-solar-panels-declare-hmrc/

It is interesting that the article refers to “ where an individual generates electricity mainly for use in their own home where the system is installed close to the home.” I believe there has been some discussion in the past on the Ripple thread reference the “more than 20pc in excess of their own domestic needs”. This would suggest that the Ripple income would be taxable (subject to the £1,000 exemption) while your own generation is not. 

Ripple is also clearly not "domestic microgeneration".

QrizB

One of Ripple's last comms was to confirm that their discussions with HMRC had been unsuccessful and income would be taxable.

Kirk Hill Co-op is currently working on tax statements for its members.