On 01/11/2011 10:27, Adrian C wrote:
On 01/11/2011 09:35, harry wrote:
The electricity I have generated so far has paid back 8% of capital
already in two quarters. Obviously the next two quarters will be much
reduced.
As it is tax free that's worth even more.

Simple, don't make it tax free forever. Hell, the goverment raise and
lower taxes at a stroke. Very simple to correct this social injustice.
Someone should start a petition.


It is by no means as simple as you think. The system itself is a wasting
asset so all the capital costs can be set off against income (as can
incidental expenses). The sure result for the Government would be that
in the early years they would see losses being set off against income
that would otherwise be taxed rather than an additional income stream.

Harry appears to have invested some £15,000 and if we assume his 8% so
far this year translates into 10% over the course of a full year he will
be lucky to get all his capital back in ten years as the FIT reduces
year by year.

All he has to show after 10 years is some free electricity over the
period. Once the capital is repaid he is still not really coining it as
in 10 years the guarantees will have run out, the panels will be by then
operating at reduced efficiency and panels or inverter may well fail, to
be replaced at Harry's expense. After 25 years, assuming the equipment
is still working, he loses the guaranteed FIT and the power company will
no doubt turn round and say: "Now its our turn. We will only pay you 10%
of what we charge for electricity and if you don't like that find some
way of dumping your excess capacity. We don't want, or need, such little
increments to our huge generating capacity."

If you want a legitimate tax free income without the uncertainties of
this scheme take out a cash ISA every year. And if you don't mind a
little hassle take in a lodger. Last time I checked (which was several
years ago) you can make up to £4000 gross tax free which is much more
than Harry is getting and he has had to shell out £15000. Taking in
lodgers OTOH can be done at minimal expense. You don't have to feed them.



--
Roger Chapman