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Do you pay tax on feed-in tariff payments?
It is one of the most common questions about the scheme and it has a clearer answer than most: there is an exemption written specifically for this, and domestic solar normally sits inside it.
The short answer. For a normal domestic installation, no income tax arises. HMRC's own guidance says no income tax will arise on feed-in tariffs received by an individual from domestic microgeneration where the conditions of the exemption are met. Those conditions are about where the system is and how much it generates relative to what the property uses.
The two conditions
The exemption applies to income from the sale of electricity generated by a microgeneration system where both of the following hold.
Where it is. The system is installed at or near domestic premises occupied by the individual.
How much it makes. The individual intends that the amount of electricity generated will not significantly exceed the amount consumed at those premises.
The second is the one that does the work, and it is about intention rather than about what a particular sunny year actually produced. It is aimed at microgeneration meant to match a household's own consumption, rather than at generating for sale.
What "significantly exceed" means in practice
HMRC puts a figure on it in its own guidance. A householder who does not intend to generate an amount more than 20 per cent in excess of their own domestic needs is unlikely to be regarded as intending to significantly exceed the electricity consumed at the premises.
That is a usefully concrete test for the ordinary case. A domestic roof sized against the household's own bills is nowhere near it. A system deliberately oversized to sell electricity is a different proposition, and so is one on premises the individual does not occupy.
Second homes
The exemption is not restricted to your main residence. It can apply to a system at a property that is not the individual's main home, provided that property is used by the individual wholly or mainly as a separate private dwelling and the other conditions are met.
Where it stops
This is an exemption for domestic microgeneration, and the register makes the distinction visible. 829,604 of the installations on the scheme are domestic. The remaining 40,203 are not: 34,292 commercial, 3,759 community, 2,152 industrial. A commercial, industrial or community installation is not covered by a relief written for householders, and its treatment is an ordinary question about the tax position of the business or organisation that owns it.
We are not tax advisers and this is not tax advice. It is a description of a published exemption, with links to the guidance it comes from so you can read it yourself. Your own position depends on facts we cannot see, and if anything about your case is not ordinary, the answer should come from HMRC or an accountant rather than from a website.
Exemption and the 20 per cent rule of thumb from HMRC's Business Income Manual at BIM40520, Income Tax exemption for domestic microgeneration, and BIM40510, renewables obligation and feed-in tariffs. Installation counts by type from the Ofgem Feed-in Tariff installation report of 2025-12-31. Information only. Not tax advice, and not financial advice.