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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Probably a question for Sam Tax. I have a small self-administered

Resolved Question:

Probably a question for Sam Tax.
I have a small self-administered pension scheme (SSAS – similar to a SIPP). The SSAS owns a commercial property which it rents out. I am planning to install a biomass boiler in the property which would qualify for Renewable Heat Incentive (RHI) payments from the government.
If the SSAS purchases the boiler and claims the RHI payments would they be taxable?
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi

Thanks for your question and asking for me

Whilst RHI payments are normally deemed to be tax free when the property is personally held as a residential home, and there is scope to claim this as a landlord of a property let out to tenants, you hold this property in a SASS and its a commercial let.

I would expect the payments to give rise to a tax liability, but I would certainly write to the Technical team at HMRC and ask for a ruling on this, in case there is scope to receive these payments without any tax liability.


I am sorry my answer is not more defined- but its based on technical knowledge rather than defined, set out legislation.

Thanks

Sam






Customer: replied 3 years ago.

Thanks for your prompt reply. However this gives rise to a further question:


If I purchase the boiler and claim the RHI payments personally would they be subject to income tax? Would the capital cost of the boiler be offset against the income as a capital allowance?

Expert:  Sam replied 3 years ago.
Hi Alec

You cannot claim the RHI payments personally - as the property sits in the SASS so any income/expenses that arise are deemed to belong within that SASS.

But you can indeed the purchase costs for the boiler are indeed a capital allowance.

Thanks

Sam
Customer: replied 3 years ago.

Sorry to take issue but I know that I can claim the RHI payments personally if I personally buy the boiler. However what I do not know is whether the payments would be subject to income tax.


 


Alec

Expert:  Sam replied 3 years ago.
Hi Alec

Thanks for your response

The answer at this time will be no - as these are commercial premises as this remains the case regardless of who purchases the boiler.

And whilst you the purchases and a taxpayer would qualify if this was a domestic property - it is not (as the SASS can only hold commercial property)
Then you have the issue if you make the boiler purchase in your own name, then its cost cannot be a capital allowance claimed against the income either.

You have chosen to put this property in a ring fenced situation, so all activity linked to this property need also to be ring fenced, whether this proves to be a pro or a con.

Thanks

Sam

Sam and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Sam


You may be interested to hear that I have heard back from HMRC (question originally sent about 6 weeks ago!) as follows: "RHI payments would be taxable for businesses and there would be no special exemptions for pension schemes. It is not clear who would be claiming these, whether it is the pension scheme or the tenant of the property". This in fact confirms what you thought.


 


Thanks again


Alec

Expert:  Sam replied 3 years ago.
Hi Alec

Thanks for the update - its useful to know outcomes - and believe me a 6 week wait from HMRC is a speedy response!

But the fact its a commercial property rules it out either way, but at least if you allow the SASS to make the purchase, you have some recoup on the purchase cost against the rental income

Thanks

Sam