Community Energy Projects Need Tax Breaks

October 7, 2014 Taxation in UKUncategorized

LONDON – New research shows that dropping the tax breaks available for investors into small community-run power-generation projects in the UK will lead to a plummet in investment, a move which will ultimately hurt communities in the country.

Dropping tax breaks for investors into small high risk companies will significantly hinder the funding flowing into renewable energy projects and community-based energy projects, according to information in a new statement issued on October 6th by the UK consumer group Community Energy England (CCE).

In its statement the CCE explained that small community power-generation projects do not have ready access to traditional sources of funding, such as bank loans and credit, and are highly reliant on funding from external investors.

However, the investors often contributing to small energy projects are highly reliant on the HM Revenue and Custom’s Enterprise Investment Scheme (EIS), which provides tax breaks to investors placing funds into qualifying risky projects.

The CCE suggests that eliminating the EIS, as is currently being proposed by the HMRC, will reduce the amount of investment into community energy projects by as much as 59 percent.

The reduction in investment will have a significant negative impact on local communities, as every GBP 100 in tax savings offered to small energy projects and their investors, the local community sees at least GBP 137 of social benefit.

Photo By: Elliott Brown