Government ends tax reliefs for Community Energy Projects

Amendments to the Finance Bill introduced this week will mean the end of certain tax reliefs available on investments in community energy projects.

Does this affect ALL community energy projects?

The amendments exclude companies whose activities involve making available reserve electricity generating capacity from  the Enterprise Investment Scheme, Seed Enterprise Investment Scheme and Venture Capital Trust Scheme. 

The Government also announced that they would introduce secondary legislation to exclude subsidised renewable energy generation by community energy organisations from these tax reliefs, and stated that these activities will not be eligible for Social Investment Tax Relief, when this scheme is enlarged (expected to happen next year).

What does this mean for investments in community energy projects?

This means that investments in community energy projects which benefit from subsidies for the generation of renewable energy will no longer be eligible for tax reliefs. 

Tax reliefs will still apply to investments in non-subsidised renewable energy projects, but such projects will be more difficult without FIT support. 

What is the timescale?

The measures will apply to any investment, including shares, made on or after 30 November 2015.

Comment

The changes are likely to place an additional pressure on the business plans of community energy organisations, particularly in light of the prospective changes to Feed-in Tariffs. 

More information about Social Investment Tax Reliefs (SITR) can be found here.

October 2015