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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Specific receipts: domestic microgeneration: renewables obligation certificates for domestic microgeneration

S782B Income Tax (Trading and Other Income) Act 2005, S263AZA Taxation of Chargeable Gains Act 1992

With effect from tax year 2007-08, no Income Tax arises in respect of the receipt by an individual of a renewables obligation certificate (ROC) and no chargeable gain accrues to an individual on a disposal of a renewables obligation certificate where:

  1. the individual receives the certificate in connection with the generation of electricity by a microgeneration system,
  2. the system is installed at or near domestic premises occupied by the individual, and
  3. the individual intends that the amount of electricity generated by the microgeneration system will not significantly exceed the amount of electricity consumed in those premises.

For the purpose of this exemption ‘domestic premises’ and ‘microgeneration system’ have the same meaning as at BIM40520.

This exemption in aimed at domestic microgeneration which is primarily intended to match the generator’s own home consumption needs. The term ‘significantly exceed’ in (b) above is not defined in the legislation and should be considered by reference to the particular circumstances. However, in general, a householder who does not intend to generate an amount of electricity more than 20% in excess of their own domestic needs is unlikely to be regarded as intending to significantly exceed the amount of electricity consumed in their own premises.