Taxation On Tariff Income

Information on how income from the Feed-In Tariffs and Renewable Heat Incentive will be taxed

How Tariff Income Is Taxed

Tariffs will be exempt from income tax. This means that domestic users and other income tax payers will not be taxed for any income received from the Feed-In Tariffs or Renewable Heat Incentive.

Companies will be subject to Corporation Tax on their tariff income.

The ruling

In the Pre-Budget Report on 9th December, the Chancellor of the Exchequer, Alastair Darling, announced that income from renewable energy systems will not be taxed. We were subsequently contacted by the Treasury with confirmation that both the generation and the export element of the tariffs will be exempt from Income Tax for householders who install systems mainly for use at home. The relevant extract from his speech can be read below.

This was a significant policy statement as it makes the returns from the tariffs for homeowners quite a bit higher.

Our thanks goes to all those people who submitted their feedback to the Treasury. Previous visitors to the site will know this was something that we have been fighting for and urging others to support. A small but perfectly formed success! 

Extract from Pre-Budget Report

7.37 Households can also play a part in generating low-carbon energy by installing smallscale renewable electricity generation on site. Feed-in tariffs, worth on average £900 in 2010 for households, will provide a financial incentive to install renewable technologies, allowing homes to generate around half of their own electricity. The Pre-Budget Report confirms that households who use renewable technology to generate electricity mainly for their own use will not be subject to income tax on feed-in tariffs. This will save households paying the basic rate of tax £180 in 2010. If necessary, legislation to ensure this treatment will be introduced with effect from 1 April 2010.

7.38 The Government wants all households to play a part in generating renewable energy. Although feed-in tariffs and the Renewable Heat Incentive will make payments over the life of installations, low-income households may still find it difficult to meet upfront costs. Building on the experience of pilot projects for Pay as You Save financing and Warm Front, the Government will consult next year on measures to help low-income households take advantage of clean energy cash-back.

Our Simple Guide To The Renewable Energy Tariffs

Click on the image below to download our printable guide to the Feed-In Tariffs and Renewable Heat Incentive (5.6mb)

Extract from Chancellor's speech

"From April, people with a home wind turbine or solar panels who plug their excess power into the national grid, will receive on average £900 a year. I intend to make this payment tax free."

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