Clarifying the corporation tax treatment of Feed-In Tariff payments received by housing associations

HMRC has reviewed its position and updated its guidance clarifying its position on the corporate tax treatment of Renewable Heat Incentive (RHI) and Feed-In Tariff (FiT) payments received by landlords, including charitable housing associations:

Landlords who provide energy to residents which has been generated from energy-efficient sources, such as heat pumps and biomass boilers, may receive RHI or FiT payments. These payments should be treated as a reduction in the cost of providing heat. If the payments exceed the cost, the excess is treated as property income (PIM1051, PIM2076 and PIM4300). In this regard, HMRC has confirmed that where a charitable housing association is providing energy to its residents as part of their property occupation, the excess will be exempt under Section 485 of the Corporation Tax Act 2010.

Landlords who generate RHI or FiTs for a purpose other than providing heat/energy to their residents will be taxable as miscellaneous income, unless the activity amounts to a trade.