As we continue to raise funds for our exciting new solar systems, lots of people have contacted us about how the scheme works, so I thought I’d outline here a bit about what our new project means for investors from a financial point of view.
Investing in BEC is a solid investment opportunity, insulated against inflation, and also offers an impressive tax break to boot.
How come? Well, we earn money via a government subsidy called the Feed in Tariff (based on the power we generate), and also from the electricity we sell to our solar landlords and the national grid.
This money then flows back into the Coop, and is used to pay interest to members as well as cover things like ongoing maintenance and development of future projects.
For our current project we anticipate a 5% return for investors, starting 1 August 2015. This rate of interest is inflation-protected since the feed in tariffs and our electricity sales – increase in line with the Retail Price Index.
Investments may also qualify for 30% tax relief under the Enterprise Investment Scheme (EIS). The EIS was set up by the government to encourage investment small businesses, and many Co-operatives and Community Benefit Societies are eligible.
EIS is a tax incentive for investors; if you invest money for at least three years you can claim back the income tax that you paid on it. The minimum investment is £500.
Note we have received pre-application approval for HMRC for EIS; we cannot apply formally apply until our solar panels are installed. However, both our previous share offers have received approval and investors in these schemes subsequently received EIS tax relief.
Shares do not change in value and members may withdraw up 5% of total capital each year.
Our shares also attract Business Property Relief, meaning they are exempt from Inheritance Tax (IT), provided the shares have been held for at least 2 years.
You can also give away shares while you’re still alive without putting Business Relief at risk, as long as the property or assets qualify for Business Relief in the first place.
See here for more on our financial benefits of investing in Brighton Energy Coop