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

MWT

pensionpawn said:

...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....?   

I'm not sure they were intending the generation and the consumption to be anything other than in the same time-frame, but there is certainly some wiggle room in the wording

Adding batteries into the mix has moved the goalposts somewhat over the last 10 years, and the more recent high SEG rates have incentivised exporting over self-consumption.

Generally there isn't enough money involved for HMRC to go hunting for this type of income, but with their increasing use of AI powered database building they may be able to target those with larger arrays at some point...

If they do then they are not going to look beyond the income stream I suspect...

Woodstok2000

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.

Yes, if you're talking about equipment costs then those would likely be allowable as expenses - it can get complicated working out depreciation etc, but it would definitely reduce your profit for a few years.

The original question was about including household energy costs as a deductible expense, which is not going to be allowed. 

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 am not sure that statement is correct either. Again I asked Google AI - “ are seg (solar export) payments to a householder taxable”? Answer:

For most household users, 

Smart Export Guarantee (SEG) payments are not taxable. 

According to HM Revenue & Customs (HMRC) rules, income from exporting surplus electricity generated by a domestic solar panel system is generally considered tax-free, provided it is for a home installation. 

Here are the key details regarding the taxation of SEG payments:

• Primary Residence Requirement: The solar system must be installed at your primary residence to qualify for the tax-free status.
• System Size: The system must not be part of a business operation and should not significantly exceed the domestic energy needs of the household (HMRC generally allows a 20% margin above consumption).
• Income Allowance: Even if the sales become taxable (e.g., if you have a very large system or multiple properties), they could still be exempt under the £1,000 "trading and miscellaneous income" allowance.
• Business Use: If the system is for a business or you are selling a massive amount of energy, the payments might be considered taxable income. 

Summary Table

Situation	Tax Status
Typical Household Solar	Tax-Free
System Installed on Primary Home	Tax-Free
Business/Commercial Installation	Taxable
Earnings > £1,000 annually	May need to report

If your system is for your own home, you likely do not need to worry about tax, but if you have a very large system, it is recommended to check with HMRC. 

To me there does appear to be uncertainty about whether you need to report to HMRC. Reading this it would seem if you have high consumption, say, 9,000kWh and you generate 10,000kWh of which you export, say, 7,000kWh at 15p/kWh and earn £1,050 you don’t have a tax liability. 

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 don’t see why SEG couldn’t be taxed at source. Dividends are. Payments in the construction industry frequently are. Prior to 2016 building society interest was taxed at source. 

pensionpawn

The discussion has so far primarily focused on testing against a single trading allowance. However for a couple living together there are two trading allowances, and that is a situation I would like to explore further as a £2000 limit must surely cover all but the most extreme circumstances? Gemini suggests it's quite common to have a utility bill in joint names, and lists the pros and cons, so I'll email Octopus.

MWT

JKenH said:

To me there does appear to be uncertainty about whether you need to report to HMRC. Reading this it would seem if you have high consumption, say, 9,000kWh and you generate 10,000kWh of which you export, say, 7,000kWh at 15p/kWh and earn £1,050 you don’t have a tax liability. 

I suspect the problem becomes moot very soon now as you will not be getting 15p/kWh for much longer...

... but, can you actually find the 20% 'exemption' in any HMRC guidance?

The various places that the comment exists seem to rely on 20% excess generating a low income and in any event less than the £1,000 trading allowance, I can't see anywhere that shows it as a definite exemption...

Also not everyone has a full £1,000 trading allowance available due to other activities or self-employment for example... 

JKenH

pensionpawn said:

The discussion has so far primarily focused on testing against a single trading allowance. However for a couple living together there are two trading allowances, and that is a situation I would like to explore further as a £2000 limit must surely cover all but the most extreme circumstances? Gemini suggests it's quite common to have a utility bill in joint names, and lists the pros and cons, so I'll email Octopus.

I just clicked on “my account” on the Octopus website and updated contact details adding “and ****** ” (my wife’s Christian name). I won’t know if that’s worked until I get the next bill.

debitcardmayhem

As far as bills in joint names goes, the obvious question is who gets to say whether the heating gets turned up. Although I don’t think that is in any doubt , and never has been even with just one name on the bill. 😎
However if there is to be a splitting of tax requirements do you have to pay the the other party half of the export payments? 

noitsnotme

debitcardmayhem said:

However if there is to be a splitting of tax requirements do you have to pay the the other party half of the export payments? 

In my case, the export payments stay on our ("joint"? - I need to check this) Octopus account as a credit and cover the import cost of both gas and electric through winter.  If there is an excess that was to be withdrawn, it would be received in a joint bank account so I guess what you mention is already covered.

JKenH said:

pensionpawn said:

The discussion has so far primarily focused on testing against a single trading allowance. However for a couple living together there are two trading allowances, and that is a situation I would like to explore further as a £2000 limit must surely cover all but the most extreme circumstances? Gemini suggests it's quite common to have a utility bill in joint names, and lists the pros and cons, so I'll email Octopus.

I just clicked on “my account” on the Octopus website and updated contact details adding “and ****** ” (my wife’s Christian name). I won’t know if that’s worked until I get the next bill.

See https://octopus.energy/help-and-faqs/articles/how-do-i-transfer-my-account-or-add-another-person-to-my-account/

"I want to add someone else to my account

No problemo! Drop us an email at hello@octopus.energy from the account holder’s email with the new person’s name, phone number and email address.

They should also message us from their email address to confirm they’re happy to be added to the account. Once we’ve heard from both sides, we’ll get it sorted."

Misslayed

pensionpawn said:

The discussion has so far primarily focused on testing against a single trading allowance. However for a couple living together there are two trading allowances, and that is a situation I would like to explore further as a £2000 limit must surely cover all but the most extreme circumstances? Gemini suggests it's quite common to have a utility bill in joint names, and lists the pros and cons, so I'll email Octopus.

I’ve had my PV panels since 2014, I still get my FIT payments from Eon, although I now get my energy from Octopus. I changed my account from my sole name to joint names, along with all our other utilities, after I remarried a couple of years ago.