VAT Implications On FIT's

[Maverick]

Hi,

Just joined up to day and already swamped in great detail.

Got a query re VAT though. From what I can see from HMRC notices am I right in saying that, for a VAT registered business anyway, if it owns a FIT then VAT is not paid on what is generated, only what is exported back to the grid? And even then the "invoice" or "payment notice" I receive from the supplier will add the VAT to the 4.5p rate and so I pay it over to HMRC.

Also, for income tax purposes, again, if the business owns the FIT then its treated as taxable income?

To give a bit of background we are in the process of buying a particular 50KW FIT as an investment and plan to do a few more.

Advice appreciated.

 

[TedM]

You are correct on both counts. VAT is paid on the export payment only (on top of the applicable export rate) as long as you have notified your electricity supplier that you are VAT registered and the FiT income will be treated as taxable business income.

 

[Worcester]

TedM is spot on with his reply.

Also bear in mind that at 50kWp export isn't deemed, it is metered. The half hourly metering costs can easily eat up a lot of export kWh. If you are measuring export, you can sometimes get better rates by selling the export on the open market than via the FiT export rate.

I may be wrong, (and I'm sure others will correct me ) however I believe that opting for export payments via FiT is a one way option, i.e. once you have opted to receive then you can't cancel it. It could be that this rule only applies for the deemed level of up to 30kWp or it may just be one FiT suppliers rule, wether you have a meter fitted or not though is one of the questions on the FiT application form.

 

[TMGL]

If you are measuring export, you can sometimes get better rates by selling the export on the open market than via the FiT export rate.

How do you access (and get pricing for) this open market?

Thanks

 

[Worcester]

Speak to the different energy companies, they all buy on the 'open market' - Remember PV is only a small generator of electricity - they are used to buying from wind turbines hydro etc. Althouigh it may seem odd to you, it isn't to them. You could start by trying one of the most approachable and easy to speak to companies like Good Energy.

 

[Maverick]

Kl thanks for the replies guys.