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Agricultural update - Renewable Heat Incentives

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9 March 2016
There are two types of RHI scheme:
  • Domestic RHI
  • Non-domestic RHI

The two schemes have separate tariffs, joining conditions, rules and application processes.

There has been some uncertainty over how RHI income should be taxed, but HM Revenue and Customs have recently announced that the tax payable on the RHI income is based on how the heat is used, and is regardless of which tariff is received.

This announcement is good news for the majority of farming businesses who have installed renewable heating systems. If a non-domestic tariff is being received and the heat is being used for the Farmhouse, tax will not have to be payable on any RHI income relating to the private use element.

Capital allowances and VAT are recoverable on the business use element of the initial costs of the renewable heating system.