Article first published in South East Farmer in May 2014.
The future of energy is a very live issue and affects us all, whether considering developing energy resources on private land, or complying with regulations.
Sustainable energy incentives will gradually reduce on commercial solar or wind turbine schemes, biomass or anaerobic digestion plants or ground and air source heat pumps. On the other hand, we could see a proliferation of government licences for oil and gas extraction, allowing deeper and wider exploration under privately owned land, over which landowners will have little or no control.
Currently, aside from the controversies over land use and impact on neighbourhoods, anyone converting agricultural land to commercial energy projects may need to factor in tax issues. Energy projects will not qualify for agricultural property relief from inheritance tax. However they may qualify for business property relief, and may also benefit from transfers into Self Invested Pension Plans.
Tax savings are possible on agricultural land, primarily arising from making a gift when the land has agricultural use only, ensuring that the possibly very significant increase in value as a result of planning permission and development falls outside one’s estate. Such a gift might be to individuals or into a Trust - the appropriate structure will depend on family circumstances and financial factors.
More generally, the Minimum Energy Performance Standards Regulations (MEPS) come into force on 1 April 2018, requiring buildings to be raised to a minimum efficiency rating. The detail will be set out in the MEPS but it is likely to be linked to Energy Performance Certificate ratings - the current indication is that any building which falls below an E rating will be affected. Landowners who let out commercial buildings should check the energy rating of the building, review options for improving energy rating and ensure any works are carried out before April 2018.
These issues will be discussed in our seminar at the Heathfield Show on 24 May 2014, at which CLA Renewables Expert Tom Beeley will be speaking with members of Thomson Snell & Passmore.