New tax free guarantee a boost for solar installations

Solar Panels - lets-do-diy.comIt might be cold and dark outside, but now could be the time to invest in solar panels thanks to a new tax break from the Chancellor in the pre-budget report.

The cash earned by homeowners for generating their own electricity from solar will be tax free, saving those paying the basic rate of tax £180 on the energy they produce in 2010. According to npower's calculations, this means a household with a well-sited solar PV installation could earn approximately £800 per year from tax free generation payments and bill savings combined.

Householders can already benefit from two payouts to invest in their home, and at the same time reduce their carbon footprint, following the introduction of the ‘Clean Energy Cashback scheme', also known as ‘Feed In Tariffs'.

Under the scheme, a homeowner will be paid up to 36.5p for every kilowatt hour produced from solar PV panels, even if they use this electricity in their home. If they export any electricity to the grid they will receive an extra payment of 5p per kilowatt hour while also making savings on their bills by reducing the energy they need to buy. This latest announcement means this income will be tax free.

At the same time, the Low Carbon Buildings Programme provides grants of up to £2,500 for homeowners to buy solar panels, subject to availability.

With a typical installation costing £11,500, the payback period is reduced to around 11 years when combined with a grant; considerably shorter than previously achievable. The earning potential would increase further if solar installation is made in conjunction with measures to improve energy efficiency such as loft or cavity-wall insulation or upgrading to low-energy lighting.

The Chancellor also announced plans to investigate ways of making solar even more affordable for low income households.

"The new Feed In Tariff arrangement means homeowners have the opportunity to earn more than ever before from generating their own electricity and together with a grant, solar is certainly a more attractive investment than it's ever been. With this latest announcement making income tax free, if you're interested in solar, now definitely looks to be the best time to buy," says James Morgan from npower's Sustainable Technology Unit.

npower has seen enquiries in solar panels increase by 200 per cent since the Feed In Tariffs were first announced and expects this to continue.

To help homeowners take advantage of the double benefit, npower solar offers a complete ‘one-stop-shop' service including site survey, grant application support, installation and buy back of excess energy.

npower's website includes guidance for homeowners on solar installations, including a suitability calculator which tells homeowners whether their property is suitable for solar installations and offers a free estimate for installation. For more information visit

N.B. The information contained in this story is provided by the supplier and does not necessarily reflect the views and opinions of

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