Selling

Why Sell My Wind Turbine?

Fifty gives wind turbine owners the chance to realise the long-term value of their investment today.

At the same time they can help you avoid the year-on-year costs and the risks associated with ownership. For example if a wind turbine fails, it can be a very expensive task to repair or replace it.

Wind turbines and the Feed-in Tariff

The UK has witnessed a surge of interest in renewable energy, with technologies and products being developed so that the potential of wind, solar, wave and biomass can be exploited to produce cleaner, sustainable sources of power.

The UK Government has encouraged and supported the expansion of new forms of power generation with generous financial incentives. Where onshore wind turbines are concerned, a Feed-in Tariff (FiT) has provided owners of small to medium wind turbines – up to 500kW – with a guaranteed income for every kilowatt of power they generate, fixed for a 20-year period from the date the wind turbine becomes operative. The FiT figure is also index-linked to the annual rate of inflation.

This prompted a healthy expansion in the number of wind turbines, but a sharp degression in the FiT rate effective from the start of 2016 has diminished the attractiveness of the sector for new investment.

The key benefits of selling your wind turbine

Individuals, businesses and organisations that have already invested in wind turbines still benefit from their agreed FiT income, up to the end of the 20-year period, but the value of their investment will depreciate over time, impacted by tax liabilities and the time and costs involved in running and maintaining the turbines. At the end of the 20 year period, the turbine is likely to have only an end-of-life recycling value.

By selling their wind turbines to Fifty, owners can realise a profit on their investment and remove the burden of on-going management, maintenance and repairs. In addition, the sale of a wind turbine can prove tax-efficient, particularly for individuals who qualify for Entrepreneurs' Relief.

Also, there is no obligation to sell the land on which the turbine or turbines stand. Owners can still enjoy the benefit of an on-going income stream through a leasing agreement with Fifty for the land, on an annual payment basis for the expected lifetime of the turbine - typically 20 years from installation. The option has built-in flexibility so that a larger initial payment can be organised with reduced annual lease payments, or a smaller upfront sum with proportionately larger lease payments.

We have provided an outline of some of the tax scenarios associated with wind turbine sales in a separate section, but of course our advice to all potential purchasers is to seek professional guidance on tax matters.

Which types of wind turbines do we buy?

The wind turbines we purchase include those manufactured by the leading names in the industry and represent the most popular on the market for small to medium-scale power generation - from 100kW to 500kW.

Key examples of wind turbines we buy include: 
  • Endurance E3120 and X29
  • Enercon E33
  • EWT 500 DW52 and DW54
  • Micon 530
  • Northern Power NPS100C
  • Norvento nED 100
  • Vestas V27 and V29
  • Wind Technik Nord WTN 225 and WTN 250

Our interest is not limited to new wind turbines; we will also consider older models that have been refurbished, taking the age and quality of the turbine into account when calculating the value. Examples of wind turbines that fall into this category include the Vestas V27 and V29 and the Micon M530.

The manufacturers and models quoted here do not form a definitive list and we welcome enquiries concerning the potential purchase of any type of wind turbine, within the small to medium power generating capacity band.

Potential Tax Advantages From The Sale Of Your Wind Turbine

Wind turbine owners who are UK residents may benefit from favourable tax rates should they choose to sell their wind turbine. We have provided some outline examples here for general guidance and information, not for specific advice. We recommend that anyone interested in selling their wind turbine should seek professional opinion on any associated tax matters.

How is income from a wind turbine assessed?

Taxable profits from wind turbines are calculated as trading income. That includes the income from feed-in tariffs and power purchase agreement income, less any trading expenses and capital allowances. The profit calculated is then assessed for tax at the relevant rate paid by the wind turbine owner.

For individuals, individual partners and individual members of an LLP business, the rate of income tax will depend on the individual's personal position, but is likely to be assessed at 40% (higher rate) or 45% (top rate). National Insurance may also be due.

Companies pay corporation tax at 20%, but in normal circumstances additional tax will be due on the transfer of surplus profits to an individual.

The normal approach when surplus profits are moved from a company into individual hands is for this to be done via dividend payments. The current tax rates for dividends above the annual allowance are 32.5% (higher rate) and 38.1% (top rate). This produces effective cumulative tax rates of 46% or 49.52% respectively for taxable profits.

This outline demonstrates how wind turbine owners can face quite high rates of income tax year by year.

Capital allowances are a form of tax deduction that, for a wind turbine owner, compensate for wear and tear to their asset. They are calculated with reference to the qualifying construction cost, although not all construction costs will qualify for this kind of tax relief.

The allowances are made in the form of an annual deduction in the annual taxable profits calculation, but the value of the deduction will decrease annually, so the tax liability is likely to rise year on year.

The Benefits of sale

For the majority of wind turbine owners who wish to sell their wind turbine sites, the most beneficial approach is to sell the company that owns the turbine.

Proceeds from the sales of shares will be subject to capital gains tax at a maximum rate of 20%. However, if Entrepreneurs' Relief is available, this could be reduced to 10%.

Entrepreneurs' Relief is available if certain qualifying conditions have been met throughout the 12 months immediately preceding the sale of shares, namely that an individual is an employee or officer of a (trading) company; owns more than 5% of the ordinary share capital; and holds more than 5% of the voting rights.

This shows that the sale of a wind turbine-holding company can be a tax-effective option.

Because the value of the wind turbine is calculated according to the number years of Feed-in Tariff payments remaining, owners can realise a substantial up-front payment that is highly tax efficient if they arrange a sale within the first three years of wind turbine operation.

Contact Us

If you are interested in finding out more about what is involved in selling your wind turbine to us and the potential benefits to be gained, you are welcome to get in touch with us directly at any time. You can find all our contact details here.

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