Stop #SolarTaxHike

This April, changes to business rates mean that organisations who own their solar panels and use the clean power it produces will see the tax bill on their panels go up. A lot. This affects more than just companies. Organisations like schools and hospitals could also see their tax bills go up.

If we’re going to stop climate change everyone needs to be working together. The Government should not be putting up barriers to organisations investing in clean, renewable energy. We need your support to get the Government to stop this tax hike; keep reading to find out how you can help.

Help Stop the Solar Tax Hike Today!

You can write to your MP to help put pressure on the issue to be looked at further. We have written a template letter that you can download below. Greenpeace have also set up a petition on business rates. Sign up and send it on to your friends.

What have we been doing already?

Since this issue became clear last year we have been working hard to solve the problem. Having met repeatedly with the Valuation Office Agency (VOA), who set the rates, we managed to reach an agreement for solar panels used mainly to export energy to the grid, however on this issue they say their hands are tied. Since then we have been writing to, and meeting with, MPs and Government officials. Last October we coordinated over 160 organisations, from companies like Ikea and Sainsbury’s to campaigning groups like Greenpeace and Friends of the Earth, to sign a letter to the Chancellor asking them to stop this hike. You can see a full list of signatories here.

While we have been successful in winning over supporters, for example 51 MPs signed a motion to stop the hike and Catherine McKinnell MP asked a question in the House of Commons, we have been unable to secure a meeting with the Chancellor or Jane Ellison MP, the minister responsible for taxation.

FAQ’s

Business rates are the council tax equivalent for businesses. They are paid on the value of the property and all the upgrades, including machinery, annually. From this April, changes to the rateable value, the perceived value that businesses pay tax on, will mean the annual tax bill on solar panels will increase 6 to 8 fold for businesses and 3.5 to 4.5 for healthcare, education and defence sites.

Solar power is a great way for people to reduce their energy bills whilst also reducing the emissions of harmful greenhouse gases. If we are going to stop climate change we all need to do our bit, so the Government should be encouraging businesses to make investments into clean energy. If this tax rise goes ahead it will punish responsible companies.

The examples above show how much different tax bills will go up. These increases may put companies off investing in the future, as well as affecting systems already built, punishing people who have already invested. In the most extreme examples, investors could actually lose money on their solar panels, which may result in dismantling and removing the panels all together.

Currently the rateable value for solar is deemed to be £8 per kW (solar panels are measured in how much power, kW, they can produce in perfect conditions). The tax is found by multiplying the rateable value by the ‘business rates multiplier,’ which is currently 49.7% but changes slightly every year. So a 100kW solar system has a rateable value of £800, and an annual tax bill (£800 x 0.497) of £396.60.

The new rateable values for solar installed for self-supply will be between £48.40-61.60 per kW (depending on the size of the system), so the same 100kW system will now be valued at £5,500, so the tax will be £2,733.50 a year.

We have been working closely with the Valuation Office Agency (VOA), the Government agency in charge of setting rates, for over a year. We reached an agreement on solar systems that are installed mainly to export power to the grid or from one business to another, but have this problem with panels where the power is used by the owner of the panels. Due to a quirk in legislation from 2000 the VOA’s hands are now tied and it is up to Government to act.

Have a look at our briefings on our resource centre.

Schools, hospitals and defence sites will see a 3.5-4.5 increase in their business rates. Schools that are registered charities, such as private schools, have exemptions from business rates.

Microgeneration is schemes under 50kW and it is currently exempt from paying business rates. However, Government has not indicated that this exemption will continue. The STA wants a permanent exemption for microgeneration.

No. Domestic solar is not subject to this tax.

It is possible to set up what’s called a “Special Purpose Vehicle”, a separate company that would own the solar panels, and sell the power to yourself. This would allow the system to be taxed under the rates for “mainly export” solar sites, which are much lower. Make sure you get professional advice if you go down this route to ensure you pay the correct tax. While this is possible it adds unnecessary paperwork and bureaucracy, hurting small businesses the most.

The Government doesn’t need to legislate to change this. If they follow the example of combined heat and power gas plants, which were exempted from business rates in 2001, they could implement it easily through a statutory instrument. A statutory instrument is a supplement to existing laws to make them work better and can be issued by the Government without having to go through all the normal legislative processes.

You can send it either by email or post. If you are unsure who your MP is you can put your postcode into Parliament’s ‘Find your MP’ service, all their contact details are there http://www.parliament.uk/mps-lords-and-offices/mps/