Further stealth taxes to hit rooftop solar ?

Published On: July 11th, 2016Categories: News

The economic viability of commercial rooftop solar installations could be severely damaged next year under plans to increase business rates taxes by up to eight times the current levels following a re-evaluation of how these assets are valued.

 

The Valuation Office Agency (VOA) has undertaken a review that will now apply a specific methodology to calculating the rateable value (RV) for solar PV. The VOA is due to release a draft rateable value and summary valuation on 30 September 2016, which will come into effect from April 2017.

 

Although both costs and subsidies have dropped significantly over the last 5 years the RV is only being based on a generic capital cost as at 1 April 2015. The new tax will affect both new and existing installations – with some system returns becoming negative.

 

The change will only apply to self-owned non-domestic installations while third party owned systems, such as those included in power purchase agreements, and solar farms will be unaffected.

 

The Solar Trade Association is calling for self-owned rooftop solar installations to be exempt from business rates in the same way that Combined Heat and Power (CHP) and micro-generation systems under 50kW are, but only intervention from ministers is likely to prevent this from happening.

 

If implemented in April 2017, this increase in business rates would mark the latest in a growing list of damaging government policy decisions affecting solar. Cuts to feed-in tariff and Renewables Obligation support have already caused untold damage to the industry.

 

Wilson Fearnall have helped a number of clients release equity from their own existing schemes as this long term uncertainty grows. Typically, the installation is passed over to a third party operator who owns the asset until the existing FiT ends. Not only does the vendor receive income for re-investment elsewhere, but they are able to use the power generated and get the assets back in the future.

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