Your excess solar generation exported to the grid could attract HMRC interest. However....

MWT

Woodstok2000 said:

pensionpawn said:

MWT said:

pensionpawn said:

1. There are two £1000 trading allowances available to offset export income, or will the exported income only be tested against the £1000 allowance of the energy account holder? If that is the case (seems unfair..), can two people register as the energy account holders?

It would follow the same principles as interest on bank accounts or dividends on shares, if there is one name on the account then that is the person who reports the income, if there are both names on the account then the income is split 50/50.

pensionpawn said:

2. Would the test be against the net energy income for the household? In other words, if the exported energy amounted to £1200 of "income" and the imported energy costs £1000, the net "gain" of £200 is well below the trading allowance, and there is no tax exposure.

Import costs have no relevance to the export earnings, so it is the full earnings from exports that would be assessed for tax. . 

pensionpawn said:
3. If a household only has a battery and no solar, and just time shifts energy, would this be treated differently?

No difference in theory, but you'd be unlikely to earn over £1,000 from exporting excess imported energy.

Why wouldn't this be treated the same way as expenses being deducted from income prior to a tax assessment, as for small businesses?

The expense of buying electricity to run your home has no relation to you selling electricity back to the grid, so it's not a related expense.

Exactly.

A domestic consumer is not a business, if you are choosing to export instead of self-consuming, or your generation is so much higher than your ability to self-consume, or you are importing so you can export at a different time of day then you are stepping over the line and they will be looking at your income not at your expenses. 

pensionpawn

Initially I would have defined consumption as what the house imported prior to having solar installed. However that initial situation was soon made non sensical as under floor heating installed quickly arrived for the majority of the ground floor, we changed the gas hob to an induction hob, installed a 10kW shower in the bathroom and A/C in three rooms 2 years ago. The A/C can 'assist' the GCH during the winter and of course excess solar can take over producing hot water for 8 months of the year.

The electrical profile of the house has changed dramtically over 10 years, however surely one of the reasons for encouraging the uptake of domestic solar was to reduce gas consumption? So, I would define my consumption now as self consumption plus import.

I tend to agree too that the trajectory of the rate of export payments is downwards, due to the over provision of solar and wind turbines, so any fiscal justification over a period of time needs to take that into account. 

noitsnotme

QrizB said:

Even at the current (generous) 15p/kWh that some suppliers offer, you'd need to be exporting 7000 kWh/yr before you earned £1000 in import payments.

Allowing for self-consumption that would need a PV system rated at ~10kWp, which is a very large domestic system.

This is unlikely to be an issue for many people, at least as the market and technology currently stands.

According to my Tesla app I generated 6300kWh last year.  Most of it was exported.  I have a 6.72kWp array.

According to Octopus, I exported 7118.35 kWh last year.  At 15p per/kWh that was £1067.75 earned.

The extra export over the solar generation was from excess left in the battery at the end of each day.

noitsnotme

Woodstok2000 said:

pensionpawn said:

MWT said:

pensionpawn said:

1. There are two £1000 trading allowances available to offset export income, or will the exported income only be tested against the £1000 allowance of the energy account holder? If that is the case (seems unfair..), can two people register as the energy account holders?

It would follow the same principles as interest on bank accounts or dividends on shares, if there is one name on the account then that is the person who reports the income, if there are both names on the account then the income is split 50/50.

pensionpawn said:

2. Would the test be against the net energy income for the household? In other words, if the exported energy amounted to £1200 of "income" and the imported energy costs £1000, the net "gain" of £200 is well below the trading allowance, and there is no tax exposure.

Import costs have no relevance to the export earnings, so it is the full earnings from exports that would be assessed for tax. . 

pensionpawn said:
3. If a household only has a battery and no solar, and just time shifts energy, would this be treated differently?

No difference in theory, but you'd be unlikely to earn over £1,000 from exporting excess imported energy.

Why wouldn't this be treated the same way as expenses being deducted from income prior to a tax assessment, as for small businesses?

The expense of buying electricity to run your home has no relation to you selling electricity back to the grid, so it's not a related expense.

But the cost of buying all the equipment (solar panels, battery, inverter) has every relation to selling electricity back to the grid.  Although im currently exporting just over £1000 a year, I won’t be in profit for a few years yet.

MWT

noitsnotme said:

Woodstok2000 said:

pensionpawn said:

MWT said:

pensionpawn said:

1. There are two £1000 trading allowances available to offset export income, or will the exported income only be tested against the £1000 allowance of the energy account holder? If that is the case (seems unfair..), can two people register as the energy account holders?

It would follow the same principles as interest on bank accounts or dividends on shares, if there is one name on the account then that is the person who reports the income, if there are both names on the account then the income is split 50/50.

pensionpawn said:

2. Would the test be against the net energy income for the household? In other words, if the exported energy amounted to £1200 of "income" and the imported energy costs £1000, the net "gain" of £200 is well below the trading allowance, and there is no tax exposure.

Import costs have no relevance to the export earnings, so it is the full earnings from exports that would be assessed for tax. . 

pensionpawn said:
3. If a household only has a battery and no solar, and just time shifts energy, would this be treated differently?

No difference in theory, but you'd be unlikely to earn over £1,000 from exporting excess imported energy.

Why wouldn't this be treated the same way as expenses being deducted from income prior to a tax assessment, as for small businesses?

The expense of buying electricity to run your home has no relation to you selling electricity back to the grid, so it's not a related expense.

But the cost of buying all the equipment (solar panels, battery, inverter) has every relation to selling electricity back to the grid.  Although im currently exporting just over £1000 a year, I won’t be in profit for a few years yet.

This isn't a business though, there are many aspects of personal taxation where you do not get to deduct costs.

The framework around solar PV and SEG is based on generating what you need for your own use and a small margin above that (20%) is considered to be OK. 

When you elect to export your entire generation capacity you are going outside the intent of the statements about SEG not being subject to tax and falling directly into the reason for the trading allowance existing.

Nothing wrong with doing what you are doing, but you don't get to deduct your import costs or your capital costs from the income you derive from trading your export.

I doubt this is going to be an issue for much longer anyway, as SEG rates will fall...

JKenH

I have added extra panels and a battery to help get through the winter months. My original installation was East/West (actually ENE/WSW)  but that produced so little in winter  (December typically was less than 10% of May or June) that we have just added some panels to our SSE facing garage roof. That starts going into shade at around 12.30pm and is fully shaded by 2pm at this time of year so isn’t as beneficial as a system on an unshaded south facing roof. in attempting to cover our winter usage we will have far more than we need in summer. December import was 726kWh. Last year (before the additional panels) June export was 721 kWh. Last year, as a whole, consumption marginally exceeded generation so perhaps the income tax bods would argue I already had the right size system. I probably wouldn’t have bothered with more panels if I had a south facing array producing 5300kWh as the generation over Autumn and winter would have met far more of my consumption and I would have imported far less.

Now with my battery I am just managing to get through January on cheap rate electricity (Octopus Go).

TBH I would be quite happy if the government taxed all export payments at source. I just don’t like the current situation not knowing whether technically my system falls foul of the rules and potentially needing to fill a tax return in with all manner of statistics, risk penalties etc, when currently, being retired, I don’t have to do a tax return.

noitsnotme

MWT said:

noitsnotme said:

Woodstok2000 said:

pensionpawn said:

MWT said:

pensionpawn said:

1. There are two £1000 trading allowances available to offset export income, or will the exported income only be tested against the £1000 allowance of the energy account holder? If that is the case (seems unfair..), can two people register as the energy account holders?

It would follow the same principles as interest on bank accounts or dividends on shares, if there is one name on the account then that is the person who reports the income, if there are both names on the account then the income is split 50/50.

pensionpawn said:

2. Would the test be against the net energy income for the household? In other words, if the exported energy amounted to £1200 of "income" and the imported energy costs £1000, the net "gain" of £200 is well below the trading allowance, and there is no tax exposure.

Import costs have no relevance to the export earnings, so it is the full earnings from exports that would be assessed for tax. . 

pensionpawn said:
3. If a household only has a battery and no solar, and just time shifts energy, would this be treated differently?

No difference in theory, but you'd be unlikely to earn over £1,000 from exporting excess imported energy.

Why wouldn't this be treated the same way as expenses being deducted from income prior to a tax assessment, as for small businesses?

The expense of buying electricity to run your home has no relation to you selling electricity back to the grid, so it's not a related expense.

But the cost of buying all the equipment (solar panels, battery, inverter) has every relation to selling electricity back to the grid.  Although im currently exporting just over £1000 a year, I won’t be in profit for a few years yet.

This isn't a business though, there are many aspects of personal taxation where you do not get to deduct costs.

The framework around solar PV and SEG is based on generating what you need for your own use and a small margin above that (20%) is considered to be OK. 

When you elect to export your entire generation capacity you are going outside the intent of the statements about SEG not being subject to tax and falling directly into the reason for the trading allowance existing.

Nothing wrong with doing what you are doing, but you don't get to deduct your import costs or your capital costs from the income you derive from trading your export.

I doubt this is going to be an issue for much longer anyway, as SEG rates will fall...

Why does the trading allowance come in to it then?  If I use the trading allowance for anything else, such as selling on eBay for a profit, I don’t take expenses in to account.  Same for my electricity export.

But if I choose not to use the trading allowance, I can declare I’m self employed and offset expenses and capital costs.  Why can’t I do that with my electricity export?

To be fair, in reality, for the small amount I’m over the £1000 I’ll just use the trading allowance and pay a couple of quid in tax.

MWT

JKenH said:

TBH I would be quite happy if the government taxed all export payments at source. I just don’t like the current situation not knowing whether technically my system falls foul of the rules and potentially needing to fill a tax return in with all manner of statistics, risk penalties etc, when currently, being retired, I don’t have to do a tax return.

Being retired does not mean you don't have to do a tax return...

The energy suppliers couldn't tax export payments at source as they have no idea how much of your trading allowance you may have used elsewhere.

I'm not really seeing where all the uncertainty is in regards to these SEG payments, if they amount to over £1,000 in a tax year then you need to be reporting it, less if you have other activities covered by the trading allowance... 

pensionpawn

I have just reread the SEG (launched 4 years after my panels were installed to replace deemed export..) quote posted earlier. 

"HMRC advises that a householder who does not intend to generate electricity more than 20% 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"

...I read export instead of generate! As my average generation over 10 years has been 6.3 Mwhrs, and my electrical needs are 5.9 Mwhrs (2 self generated consumption plus 3.9 import), I'm well within the 20% so perhaps the trading allowance limit doesn't come into play....?   

JKenH

MWT said:

JKenH said:

TBH I would be quite happy if the government taxed all export payments at source. I just don’t like the current situation not knowing whether technically my system falls foul of the rules and potentially needing to fill a tax return in with all manner of statistics, risk penalties etc, when currently, being retired, I don’t have to do a tax return.

Being retired does not mean you don't have to do a tax return...

The energy suppliers couldn't tax export payments at source as they have no idea how much of your trading allowance you may have used elsewhere.

I'm not really seeing where all the uncertainty is in regards to these SEG payments, if they amount to over £1,000 in a tax year then you need to be reporting it, less if you have other activities covered by the trading allowance... 

I asked Google AI “in what circumstances do retired people have to submit a tax return”. Answer: 

In the UK, retired people generally do 

not need to fill in a Self Assessment tax return if their tax affairs are straightforward (e.g., only state pension and one private pension) and their tax is collected automatically through PAYE. 

However, you will likely need to file a tax return if you fall into one of the following circumstances for the 2024/25 or 2025/26 tax years: 

1. Complex Income & High Earnings 

• Total Income Above Personal Allowance: Your total taxable income exceeds the Personal Allowance (£12,570 for 2024/25 and 2025/26) and this tax cannot be collected via PAYE.
• High Income: Your total income is over £100,000, which causes you to lose your Personal Allowance.
• Untaxed Income: You have significant untaxed income, such as from property rentals, savings interest, or dividends that exceed the Personal Savings/Dividend Allowance.
• Self-Employment: You are doing some part-time work or consultancy and earn over £1,000. 

2. Specific Pension & Investment Scenarios

• Flexible Pension Access/Lump Sums: You have accessed your pension pot (before age 55, or 57 from 2028) or taken a large, one-off withdrawal, which often results in emergency tax codes and requires a refund claim.
• Multiple Private Pensions: You have several small pensions, and the tax codes are not accurately reflecting your total liability, leading to underpayment.
• Capital Gains: You have sold assets (like a second home or shares) and made capital gains over the annual exemption (£3,000 for 2025/26). 

3. Other Circumstances

• Living Abroad: You receive a UK pension but live overseas.
• Specific Tax Reliefs: You need to claim relief for large charitable donations or additional pension contributions.
• HMRC Request: You have received a notice from HMRC asking you to complete a tax return. 

Important Notes for Retirees

• State Pension is Taxable: While the State Pension is often paid without tax deducted, it counts towards your personal allowance. If your total income (including state pension) is over £12,570, tax is due on the excess.
• No National Insurance: You stop paying National Insurance on earned income once you reach State Pension age.
• Simple Assessment: If your affairs are simple, HMRC might send you a "Simple Assessment" letter (a bill) rather than asking for a full tax return.
• Deadlines: For the 2024/25 tax year, the deadline to register is 5 October 2025, and to file online is 31 January 2026.