BTL and Solar panels – Are there easy tax answers?

BTL and Solar panels – Are there easy tax answers?

5:50 AM, 2nd May 2022, About 4 weeks ago 5

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Is there a simple answer to the question? If I put solar panels on a residential BTL property as a sole trader, in Scotland. 1) Can I offset the cost as an expense in the current year. 2) Is it just Capital offset at the point of sale.

I understand there may be, or seem to be in my long search of HMRC help pages a mix of possible outcomes. I see an expense shown as a 1 year (Chancellers, easy heat scheme, or something worded this way), and, a 130% expense claim under Capital, at point of sale.

Just the yes/no to my question one is really where I’m stuck at this point in time.

Also if anyone else has found the answer in 2022 notes to completion of self-assessments (property pages) or elsewhere would be most welcome.

Thanks to all in advance.

Richard

 



Comments

by Old Mrs Landlord

8:20 AM, 3rd May 2022, About 3 weeks ago

Have you consulted the Scottish Landlords' Association on this matter? They may already have done all the legwork to find answers to your queries.

by Rbinscotland

8:57 AM, 3rd May 2022, About 3 weeks ago

Reply to the comment left by Old Mrs Landlord at 03/05/2022 - 08:20
Thanks, I'll do that.

by Jo Westlake

9:09 AM, 3rd May 2022, About 3 weeks ago

I'd really like a definitive answer to the same question for BTLs in England.
I've had solar panels on 3 houses for 10 years and they're great. I'd certainly like them on 2 or 3 other houses, either as a way of improving the EPC or because bills are included in the rent.
When I had the first lot installed my accountant said they weren't tax deductible but the Feed in Tariff wasn't taxable so it all kind of balanced out.
Now the Feed in Tariff doesn't exist for new installations has the tax treatment of solar panels changed?

by Pete England - PaTMa Property Management

9:57 AM, 3rd May 2022, About 3 weeks ago

I would say Solar panels would be treated as a capital cost, and not an expense as you previously didn’t have them. Similar to domestic appliances. You could of course put them on and sell the energy back to the tenant. I’ve not heard of this been done before, but this is how community energy schemes work best, it would need to be documentaries in the AST to be valid. I would add a Battery to the installation giving the tenant 80% of the power generated so the charge can be simply calculated from from the meter reading each year.

by Rod

11:23 AM, 3rd May 2022, About 3 weeks ago

As you say, it may qualify for capital allowances, allowing you to write off the cost in the first year.
Ongoing maintenance costs will be available as a revenue expense.

Of course, your preferred treatment depends on whether you are looking to minimise your income tax, or treat it as a capital to reduce CGT, subject to relevant tax guidelines. If capital, and capital allowance not allowable, it could be argued that an annual depreciation charge should be applied to reflect the expected life of both the panels and supporting equipment.

One for your accountant / tax advisor


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