Buying Shares (Investing) in a solar Farm
Having limited space to increase my solar PV capacity, I have purchased some shares in Ripple Energy and Derril Water Solar Farm which is due to come ‘on line’ late next year. I wondered if any other readers have similar arrangements to augment or use such schemes as a substitute for home-based generation please? Regards, Toodles.
Toodles, he heats his home with cold draughts and cooks his food with magnets.
Hi - I'm new to Ripple Energy too. I decided to do the same as yourself and have taken a position in Derril Water to supplement our solar PV and battery storage.Posted by: @toodlesHaving limited space to increase my solar PV capacity, I have purchased some shares in Ripple Energy and Derril Water Solar Farm which is due to come ‘on line’ late next year. I wondered if any other readers have similar arrangements to augment or use such schemes as a substitute for home-based generation please? Regards, Toodles.
Mitsubishi Ecodan 11.2kW R32 ASHP; Ecodan DHW cylinder; UFH+rads
20x430W Jinko TOPCON Tiger Neo solar; Luxpower 6+4kW hybrid inverter; 20kWh LFP battery storage
@atommyk Perhaps I’m using poor terminology here; what I meant was that if one is unable to accommodate solar panels on your own property, by investing in a solar farm such as Ripple Energy offer, the generation from PV you invest in will be credited to your energy provider’s bills thus reducing your bills. The amount one invests can be as little as approx. £25 and up to 120% of your annual energy costs.Regards, Toodles.
Toodles, he heats his home with cold draughts and cooks his food with magnets.
I might be missing something here but has anyone crunched the numbers to see what your actual gain is after you have paid HMRC the tax on the share income? FIT payments have a tax exemption, these don't. Their calculator seems to avoid the subject assuming that it all falls within your personal allowance which is highly unlikely.
@abernyte Would this statement apply:- For co-operative societies where the dividend is based on retail purchases of members, the dividend is effectively a discount on the purchase price and is not treated as taxable income
I would say no as Ripple is not a cooperative society. I think the HMRC will have a firm view on that!
We thought about this and I reserved a place but eventually decided against it at the moment. Not a reflection on the product but we needed the money for the ASHP. Our reservation carries over to the next project though so will look at that when it pops up.
There’s lots of discussion about Ripple on the MSE Green and Ethical forum which clarified that the returns are treated as savings income so contribute towards the £1000 tax free allowance that basic rate taxpayers have.
Smart Tech Specialist with Octopus Energy Services (all views my own). 4.4kW PV with 9.5kWh Givenergy battery. 9kW Panasonic Aquarea L ASHP
Posted by: @abernyteI might be missing something here but has anyone crunched the numbers to see what your actual gain is after you have paid HMRC the tax on the share income? FIT payments have a tax exemption, these don't. Their calculator seems to avoid the subject assuming that it all falls within your personal allowance which is highly unlikely.
Based upon the representative figures on the ripple website, the return on investment would appear to be just over 9.3% during the first year. As far as this being deemed taxable income I am not certain. At the moment we are on the Octopus Tracker tariff which is averaging a discount of approximately 12p below the Standard Variable tariff of 27p, but I don't expect to have to pay tax on this saving.
Even if the saving was deemed to be treated in the same manner as a dividend payment from stock market shares, the present tax free allowance is £1000 this tax year, falling to £500 next year.
The statement that I do find a little concerning on the Ripple website is "estimated first year savings, assuming full generation in 2025". It would also appear that the 9.3% rate of return is not maintained for the full 40 year lifespan of the project.
More detailed information is therefore required.
The payments are considered interest income not dividend income. So definitely think about that in terms of any overall personal situation. Interest income may be quite high for some at the moment.
"Our accountants have advised us that trading benefit savings are deemed share interest. Unless we hear otherwise from HMRC it should therefore be treated as interest income.
What does this mean for you?
If your trading benefit savings (along with all other forms of interest income) do not exceed your personal savings allowance they would not be taxable.
If you have already reached your annual personal savings allowance through other sources, your wind farm savings would be taxable at your marginal rate"
The amount you get from ripple is not fixed each year. It depends on the wholesale price and the operating costs in that year. It is important to consider what happens if the solar farm has issues after a number of years.
The amount you can invest is limited to 120% of your energy consumption in kWh not 120% of your annual energy cost. They have done this for potential future tax reasons to be in line with FIT. So I would be a little bit careful for anyone getting FIT payments just on the unlikely off chance the government set the 120% limit at combination of FIT and schemes like Ripple for anti avoidance measures.
Seeking exemptions from Government
We are in active discussion with HMRC and HMT. We have asked for the tax treatment of Ripple savings to be brought in line with that of home solar. For home solar, provided generation is not more than 120% of your annual household consumption, all savings and FIT payments are disregarded for tax purposes. We want all Ripple savings to be disregarded for tax purposes too, provided generation is not more than 120% of a household’s consumption. This is part of the reason why we set the maximum ownership cap at 120% of your annual consumption, to make the change as easy as possible.
We do not know if this will be successful. You should, therefore, anticipate that your trading benefit will be treated as interest income unless you hear otherwise. We will let you know if there is any change to the treatment.
Posted by: @jeffFor home solar, provided generation is not more than 120% of your annual household consumption, all savings and FIT payments are disregarded for tax purposes.
See https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim40520
However, in general, a householder who does not intend to generate an amount of 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.
Posted by: @chickenbigPosted by: @jeffFor home solar, provided generation is not more than 120% of your annual household consumption, all savings and FIT payments are disregarded for tax purposes.
See https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim40520
However, in general, a householder who does not intend to generate an amount of 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.
That makes sense, if you don't intend to, then don't penalise just because it may be more sunny etc.
However if you intend to then tax it.
If someone deliberately has FIT payments and then invests in Ripple knowing the intention is to exceed the limit then I can imagine this might be an issue. Academic at the moment as Ripple income is already taxable and I haven't seen any news of changes.
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