When selling your turbine, it is vital to understand the tax situation. This can have a dramatic effect on the money received.
Where turbines are often operated via an SPV (Special Purpose Vehicle), a sale of the shares would realise the underlying value immediately. Based on a working model example, a Vestas V-27 operating over a period of 18 years would realise a substantial recovery of value.
You may currently extract the annual profits from the SPV as dividends and these will be subject to wealth eroding income tax rates up to 38.1%. However, a sale of the shares would mean that the value could be realised at a far lower rate of tax.
Sales of shares are, generally, taxed at a maximum of 20% and a special rate called ‘entrepreneur’s relief’ may reduce this to 10%, subject to meeting certain criteria. You would receive the whole value of the sales proceeds at settlement.
In addition, you may personally own the land and lease it to the SPV for an agreed rent, therefore, there would be continuity of this arrangement after a sale of the shares. Where a larger turbine is installed by the new owner after the sale of the SPV, there would be an uplift in the rent agreement linked to RPI. The total rental income payable over the remainder of the 20 years ROC period would preserve an ongoing income for you.
Therefore in some cases, selling your turbine may prove more lucrative than retaining ownership. It can certainly be less stressful!
COVID-19 – FARM ENERGY NI CONTINGENCY MEASURES IN PLACE TO ENSURE CONTINUAL OPERATION OF OUR CUSTOMER SERVICES
Farm Energy NI is taking the spread of Coronavirus extremely seriously. Our number one priority remains the safety and well being of our employees and customers.
Our staff team is working from home but they are otherwise available as normal. The FENI office is closed but calls to it will be redirected and answered. Face-to-face meetings and networks events have been suspended and we are carrying out our correspondence through calls, emails and online conversations.
We are staying well informed of the developing situation and are following the advice and recommendations from the Government, relevant Public Health bodies and the World Health Organisation.
Current government advice defines energy generation as an “essential service” under the heading of “utilities, communication and financial services”. This means that NIE Networks, OFGEM & the Power Companies will continue to operate to the best of their abilities to ensure all power and export transactions are not interrupted.
If your generating site is being managed by our associates, Realise Energy Services, their engineers are continuing to service and maintain customers’ turbines to ensure their safe operation as part of the UK energy network and respond to unscheduled events as needed.
We will continue to monitor the situation and to be guided by advice from the appropriate authorities. We will also be doing our best to stay in touch with our members. If you have any questions, concerns or just like a chat we are here for you at this difficult time. Keep safe and keep well.
Farm Energy NI