Considering leasing industrial unit roof

[SolarCity]

We've been approached by a firm that wants free solar panels. We originally told them that we didn't offer this but having taken a quick look at the figures, we're looking at giving it a go.

This company has just built a new unit with a trapezoidal roof. There is enough room for a 10kWp system and they are based in Cornwall - south facing with no shade.

I have a few questions to anyone that has any knowledge in this area.

1. What are the tax implications?
2. Does anyone know of a solicitor that can help us sort a contract out?
3. Am I mad?

 

[SRE]

We've been approached by a firm that wants free solar panels. We originally told them that we didn't offer this but having taken a quick look at the figures, we're looking at giving it a go.

This company has just built a new unit with a trapezoidal roof. There is enough room for a 10kWp system and they are based in Cornwall - south facing with no shade.

I have a few questions to anyone that has any knowledge in this area.

1. What are the tax implications?
2. Does anyone know of a solicitor that can help us sort a contract out?
3. Am I mad?

No, you're not mad, we're putting them on the houses we rent out - slightly different because we own (well mortgage!) the houses but a lot of the principles are the same. Have you got a copy of a domestic contract for rent a roof? A Shade greener will send them out on request of they think you're roof is suitable that might be a starting point.

I know nothing about tax and leave it to peeps who do but - couldn't you wrap it up in a pension and avoid tax that way?? I've been thinking about that but get too bored looking at it to work out if it could go into a SIP???

Finally new tapezoide - I know you'll already know this, but most fixings will void the guarantee for the roof - does your client want this or have you found a way round it?

 

[Worcester]

@BiggsSolar

I would suggest setting up a company as a vehicle to do this specifically.

That way you can offset all expenditure against the income, and you can charge the company the install costs.

The company will make a loss for many years which can be acrrued and offset against the income, and you may well then want to pay dividends on the shares that you own (careful who else is an owner bearing in mind it will be for 25 years - will you still be together / friends) instead of salary. effectievly it is a great 25 year pension fund.

As a seperate company you should now be able to go to the bank and raise the capital aganinst the project with the project as collateral.

So why the *** doesn't the owner do that himself? - Short sighted thinking .....

Are you mad? No, the customer is.

 

[BruceB]

A variation on the theme:

If your main solar business is making lots of income and you really do not want to pay corporation tax on it, then use the funds in your company to buy the array. It is capital expenditure but this year the Annual Investment Allowance is £100,000 (next year it drops to £25,000) so you can claim that capital expenditure against income for corporation tax purposes and then you can pay any profit from the array (and any other profits you do not to need to draw as salary or dividends) as a company contribution to a SIPP, which is also deductible against corporation tax.

On the other hand you can help the country out and pay a bit more tax.

This is not financial advice, see an accountant if you want that!

Regards
Bruce

 

[TonyL]

A variation on the theme:

If your main solar business is making lots of income and you really do not want to pay corporation tax on it, then use the funds in your company to buy the array. It is capital expenditure but this year the Annual Investment Allowance is £100,000 (next year it drops to £25,000) so you can claim that capital expenditure against income for corporation tax purposes and then you can pay any profit from the array (and any other profits you do not to need to draw as salary or dividends) as a company contribution to a SIPP, which is also deductible against corporation tax.

On the other hand you can help the country out and pay a bit more tax.

This is not financial advice, see an accountant if you want that!

Regards
Bruce

A good response until the bit about the legalised theft schemes that masquerade as pension funds, self invested or managed. Suggest consideration be given to paying it out as a dividend and ISA'ing it. You loose a little bit of CT relief but the money is yours. Please DYOR. Pesnions were great when they gave 15% annuities. Even 10% was good. Today, they barely pay what you can get on a long term deposit. Better still, put it in index linked bonds.

 

[BruceB]

I partly agree, but prefer not to pay the 20% tax now. Costs in the cheaper SIPPs are very low and the investment performance is down to whatever you choose.

 

[SolarCity]

Thanks for the responses, fellas. It's a nice straightforward install so I'm pretty keen on getting it sorted. I'll speak to my accountant brother about the best way to pull it off financially and I'll try and get hold of a contract from another firm.