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Investing in renewables is more viable than ever. However, the installation of renewable technology often involves a significant financial commitment and Government subsidies and incentives are being reduced.
There are significant UK-wide incentives available to help off set the set up cost of renewable technologies. Therefore, the financial outlay required can, with careful tax planning, attract valuable capital allowances with between 65 and 80 per cent of expenditure eligible for some form of tax relief.
Applicable technologies include:
- Wind turbines
- Small scale hydro schemes
- Ground source heat pumps
- Biomass (heating and CHP)
- Photovoltaic cells
- Solar hot water heating and
- Anaerobic digestion
Most of the technologies would attract allowances at the minimum 8% writing down allowance. However, some may qualify for 100% tax relief under the Enhanced Capital Allowances regime if listed on the ECA Energy Technology List, for example biomass boilers.
The Renewable Heat Incentive for heat generation and Feed-in-Tariffs for electricity generation are valuable sources of revenue for any renewables installation. This income however, will be subject to either income or corporation tax.
Although, using the tax relief available from capital allowances to off set any tax charge, can make a venture into renewable energy production worthwhile. However, if a Renewable Heat Incentive or Feed-in-Tariff is received Enhanced Capital Allowances can’t be taken, only the standard writing down allowances.