I see what you mean.... if you invest £1k onto your roof, it will provide you with more net income than earning interest (and paying tax on it). You do, however, use your capital - so it's no longer available to you. You would just hope that you swap cash-in-hand for increased house value. Over time, maybe, but it could be a moot point as your installation costs are always lost. It's only the hardware you end up retaining... Having said that - I bought solar because I felt it was the right thing for me to do. Possibly less so for those who have to 'borrow' to install it.
Physical goods or tangible goods can be investment Though they can depreciate in value in time, You would have to buy the electricity anyway unless you like living in the dark, So buying solar panels is like buying your electricity all in one go up front, in the hope that you will break even and end up better off, In the long term, No investment is safe you can lose the lot
Sorry to nit-pick, but I think probably there is no income tax on solar payments (capital gains would not be relevant - unless you're talking about the increase in value of your house where you live, in which case you wouldn't have to pay CGT on that when you sell up)
Good point. What I'm getting at in this video is that when you're comparing to other investments, you need to consider your after tax return. So when comparing solar to the stock market, remember that solar returns have no capital gains tax. -Tok
@@spiritenergy_uk Ha! Ok, I get what your saying BUT.... effectively, you can never sell the physical installation of panels etc at a profit, to get your money back, so again, CGT wouldn't be relevant. Whereas the investments you talk about are specifically purchased so that you can resell them at a profit - and on this profit that you would pay CGT, NOT income tax (believe me, I'm not just trying to score points, but you might as well get the facts perfect?). For the record, your videos are great and very informative!
But you are correct in saying that the gains you make, compared to other types of investment incomes, eg, rent from a property, is potentially 25% higher (or 66% higher, if you're a higher rate tax payer, which many who invest in solar may be) from tax free solar income, even though the basic rate of income tax is 20%. Ok, I'll shut up now!
You can sell your house at a higher price with solar panels installed, and make a capital gain on those panels because the net present value exceeds what you paid for them. If it's your only house, you don't pay capital gains on it, but good point, if it's a second house, you would pay capital gains.
One way to think of this is that there's no tax because you're buying your electricity at a discount. But the other way to think of this is that you've gone into the business of building a power station on your roof. Of course, if you did build a power station and sold the power to your neighbours, you would pay tax on your profits. But, because you're selling it to yourself, you don't pay tax. The video points out that if you sell your electricity to the grid, HMRC might regard you as running a business of being a power station, but, in a remarkable act of generosity by the government, they don't regard this as taxable.
Who can you recommend in the Derbyshire area
Income tax is payable if you generate more than 120% of your domestic consumption?
I see what you mean.... if you invest £1k onto your roof, it will provide you with more net income than earning interest (and paying tax on it). You do, however, use your capital - so it's no longer available to you. You would just hope that you swap cash-in-hand for increased house value. Over time, maybe, but it could be a moot point as your installation costs are always lost. It's only the hardware you end up retaining...
Having said that - I bought solar because I felt it was the right thing for me to do.
Possibly less so for those who have to 'borrow' to install it.
Physical goods or tangible goods can be investment Though they can depreciate in value in time, You would have to buy the electricity anyway unless you like living in the dark, So buying solar panels is like buying your electricity all in one go up front, in the hope that you will break even and end up better off, In the long term, No investment is safe you can lose the lot
Well they don't tax sunshine yet
Yes profits are tax free, but it's apples and oranges when comparing solar investment vs stock market vs BTL properties.
Thanks for your comment. I’m interested, what do you mean?
Sorry to nit-pick, but I think probably there is no income tax on solar payments (capital gains would not be relevant - unless you're talking about the increase in value of your house where you live, in which case you wouldn't have to pay CGT on that when you sell up)
Good point. What I'm getting at in this video is that when you're comparing to other investments, you need to consider your after tax return. So when comparing solar to the stock market, remember that solar returns have no capital gains tax.
-Tok
@@spiritenergy_uk Ha! Ok, I get what your saying BUT.... effectively, you can never sell the physical installation of panels etc at a profit, to get your money back, so again, CGT wouldn't be relevant. Whereas the investments you talk about are specifically purchased so that you can resell them at a profit - and on this profit that you would pay CGT, NOT income tax (believe me, I'm not just trying to score points, but you might as well get the facts perfect?). For the record, your videos are great and very informative!
But you are correct in saying that the gains you make, compared to other types of investment incomes, eg, rent from a property, is potentially 25% higher (or 66% higher, if you're a higher rate tax payer, which many who invest in solar may be) from tax free solar income, even though the basic rate of income tax is 20%. Ok, I'll shut up now!
You can sell your house at a higher price with solar panels installed, and make a capital gain on those panels because the net present value exceeds what you paid for them. If it's your only house, you don't pay capital gains on it, but good point, if it's a second house, you would pay capital gains.
One way to think of this is that there's no tax because you're buying your electricity at a discount.
But the other way to think of this is that you've gone into the business of building a power station on your roof.
Of course, if you did build a power station and sold the power to your neighbours, you would pay tax on your profits. But, because you're selling it to yourself, you don't pay tax.
The video points out that if you sell your electricity to the grid, HMRC might regard you as running a business of being a power station, but, in a remarkable act of generosity by the government, they don't regard this as taxable.