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Chapter BIM40510

Document Cited in Related
Vincent
Published date22 November 2013
Record NumberBIM40510
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

The term ‘microgeneration’ is used to refer to electricity generation equipment of the smallest capacity which covers generation of electricity up to 50 kW. At the lower end of the range are microgenerators intended for installation in domestic premises. Support for microgeneration takes various forms including the renewables obligation and feed-in tariffs.

Renewables obligation

The renewables obligation was introduced in April 2002 as the main mechanism for supporting renewable energy. Generators of all sizes can claim renewables obligation certificates (ROCs) in relation to renewable electricity that they generate. The generator can then sell their ROCs to another person.

The sale of a ROC normally has Corporation Tax, Income Tax or Capital Gains Tax consequences depending on the status of the seller and the precise facts. But see BIM40530 for exemptions for income or gains arising to an individual from domestic microgeneration.

Feed-in tariffs

The renewables obligation remains the primary mechanism to encourage deployment of large scale renewable electricity generation but as of 1 April 2010 a feed-in tariffs (FITs) scheme was introduced to encourage additional small scale electricity generation. FITs consist of two elements, a generation tariff which is receivable in relation to electricity generated and an export tariff which is receivable for electricity exported to the wider energy market. Microgenerators eligible for FITs are not eligible for support under the renewables obligation.

Generation tariff

A generation tariff is payable by reference to the electricity generated. The tax treatment of the tariff for Income Tax and Corporation Tax purposes will depend on the nature of the receipt in the hands of the recipient. In general where the receipt is received in a business capacity it will be a business receipt on normal principles. For the treatment of sums received in a business capacity see BIM40450.

A generation tariff received other...

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