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Critchleys is a trading name of Critchleys LLP

© Critchleys 2011 Content is for information only. No action should be taken without seeking professional advice.

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•

Raising money•

But also social engineering

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Cake or biscuit?

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–

Clothing is standard rated•

VAT at 20%

–

Except children’s clothing•

VAT at 0%

–

Unless made of skin•

VAT at 20%

–

Unless the skin is goat skin•

VAT at 0%

–

Unless the goat is Mongolian or Tibetan•

VAT at 20%

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•

Tax policy is used to modify behaviour•

We’d expect tax reliefs to encourage desirable behaviour–

And penalise bad behaviour

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Going green is desirable•

So the tax system should encourage going green

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Well, there is some incentive to be green•

But it’s not always that simple!

•

A lack of coherent policy

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•

Constantly rising•

Encouraging fuel efficiency

•

Or other fuels–

Including electricity

•

Is that actual policy?

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•

Linked to emissions

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Business spends money on equipment•

Annual Investment Allowance–

Currently £100k, but going down to £25k

•

What’s left depreciated for tax at 20% pa (18%)•

“reducing balance basis”

–

Or 10% if it’s an “integral feature”

(8%)

•

Can take a long time to claim it all back

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Can write all of the costs off in one go!

•

Enhanced Capital Allowances (or ECA)•

Incentive for businesses to buy this technology

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combined heat and power;•

lighting;

•

pipework

insulation;•

boilers;

•

motors and drives;•

refrigeration;

•

heat pumps;

•

radiant and warm air heaters;•

compressed air equipment; and

•

solar thermal systems•

automatic monitoring and targeting equipment.

•

air to air energy recovery equipment;•

compact heat exchangers;

•

heating, ventilation and air conditioning equipment •

uninterruptible power supplies

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Second-hand equipment doesn’t qualify–

No incentive to recycle!

•

In theory, go to www.eca.gov.uk/

•

It should tell you what specific things qualify

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Wind turbines•

Solar photovoltaic cells

•

Small hydroelectric projects

•

The ECA scheme supports technologies that save energy including those that take energy from external, natural energy sinks (e.g. solar radiation, ground heat) and convert it into useful heat. Technologies that generate energy such as PV do not directly save energy per unit of work but instead displace the consumption of fossil fuels so as to reduce CO2

emissions (i.e. the same goal is achieved through slightly different means) are not covered by the ECA scheme. That means PV is not covered by this government policy instrument. It is covered by other policy instruments such as the renewable obligation and

central or local

government grant schemes. That means a good level of government support for PV exists without the use of the ECA scheme.

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péÉÅá~ä=é~óãÉåíë=Ñçê= êÉåÉï~ÄäÉ=ÉåÉêÖó=ÖÉåÉê~íáçå•

Solar

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Small wind•

Small hydro

•

Anaerobic digestion

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No tax relief for any equipment costs•

Tax-free saving of domestic costs

•

Tax-free sale of surplus electricity–

Subject to scale

–

No liability to income tax arises in respect of income arising to an individual from the sale of electricity generated by a microgeneration

system if—•

(a)

the system is installed at or near domestic premises occupied by the individual, and•

(b)

the individual intends that the amount of electricity generated

by it will not significantly exceed the amount of electricity consumed in those

premises.

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•

Capital allowances on equipment–

But write-off could be over 30+ years

•

Feed-in tariffs are fully taxable

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... may be better for the public than for businesses

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Most of the cost of a building doesn’t qualify for tax relief–

Except the equipment as part of building

–

Which often isn’t very much

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•

Add insulation to a building•

Qualifies as equipment

•

But only if added afterwards!

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•

Special tax relief for cleaning up contaminated land

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•

A bit like Research & Development tax credits•

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spends money on cleaning up

contaminated land•

For every £1 spent, the company can deduct £1.50 in working out its taxable profits

•

Can claim a tax rebate at 16% of any loss created this way

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•

Company must have bought the site in a contaminated (or derelict) state–

Don’t get it for cleaning up your own mess

•

Costs must be employee costs or materials•

Restrictions on what counts as contaminated

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Government policy not always joined up•

Not always fully thought out

•

Maybe sometimes more about being seen to try?•

But at least there are attempts

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eçï=qç=pÉí=ré=~=jáÅêç= dÉåÉê~íáçå=mêçàÉÅí=

Critchleys is a trading name of Critchleys LLP

© Critchleys 2011 Content is for information only. No action should be taken without seeking professional advice.

tÜ~íÛë=íÜáë=båíÉêéêáëÉ= fåîÉëíãÉåí=pÅÜÉãÉ=íÜáåÖ\

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All about behaviour modification•

Government wants us to set up more businesses

•

Wants the rest of us to fund them•

But we don’t want to risk losing our money

•

So they give tax breaks

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•

Investors put money into unquoted trading companies–

Have to buy new ordinary shares

–

Can’t be any special protection–

In other words, got to take risks

–

Restrictions on what companies qualify

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•

Investor can claim back 30% Income Tax•

Any gains after 3 years are CGT free

•

Investor can roll over capital gains from somewhere else

•

Inheritance Tax exemption after 2 years

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•

Income Tax relief:

30%•

CGT rolled over, up to

28%

•

Inheritance Tax saved

40%

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•

Community projects can lend themselves well to EIS

•

Get lots of local people to invest•

If it’s set up right, they get EIS

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•

Minimum investment £500 per investor–

But they get back £150 tax

–

Can get dividends if it’s successful

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Shares can’t be redeemable–

May be possible to set up a market in them

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Companies won’t qualify for EIS if they depend on Feed In Tariffs

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Unless generating by 6 April 2012

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