Solar farm vs growing crops

Clive

Staff Member
Arable Farmer
Location
Lichfield
Biuld costs interest payments etc are allowable on any investment of this nature.
And the revenue does not come from the government.
fITs and export are paid by the energy companies

I get that and I doubt the payments could ever change as you have contracts right ?

My point is your income can be clawed back by any government minded to do so in tax if they felt it would be a popular move with voters, recent dissatisfaction about how green energy is subsidised etc and affecting domestic consumers and turning large commercial users away from the uk makes me think that is not unrealistic to think the goal posts might just get moved on you within the next 20 years
 

WillB

Member
Location
Shropshire
I get that and I doubt the payments could ever change as you have contracts right ?

My point is your income can be clawed back by any government minded to do so in tax if they felt it would be a popular move with voters, recent dissatisfaction about how green energy is subsidised etc and affecting domestic consumers and turning large commercial users away from the uk makes me think that is not unrealistic to think the goal posts might just get moved on you within the next 20 years

You have to live for today before you worry about tomorrow.

If the subsidies were cut and the tenant buggered off, I wouldn't be too dissatisfied with having a field of perfectly good, electricity producing solar panels, with a very expensive connection to the grid to play with. I bet the electricity sales would be higher than the annual rent and it would be a trading entity then, and so no IHT to worry about.

If the tax thing would be stopping you, then gift the site to your kids, spouse whatever. If you can grow 6t of wheat every year at £200/t to make the same profit then it doesn't look so good.
 

Goweresque

Member
Location
North Wilts
I get that and I doubt the payments could ever change as you have contracts right ?

My point is your income can be clawed back by any government minded to do so in tax if they felt it would be a popular move with voters, recent dissatisfaction about how green energy is subsidised etc and affecting domestic consumers and turning large commercial users away from the uk makes me think that is not unrealistic to think the goal posts might just get moved on you within the next 20 years

Who does a farmer with solar panels on his land have a contract with? The Government? No. The electric supply companies? No. Some tinpot solar development company thats been set up by a bunch of get rich quick merchants? Bingo.

The entire industry is based on no future government ever changing the rules of the game. Which given if you take any 25 years period in postwar UK history and compare the beginning and the end of that period
you won't find one where the entire level of taxation, general thrust of public policy and government involvement in the economy hasn't altered drastically.

If a Government of the future wants to change the rules they will find a way. They write the laws after all. And if the current laws prevent them from doing what they want, they'll make new ones that allow them to get what they desire. And all the solar development companies (and other renewable energy developers too) would go bust overnight, the assets sold to whoever would pay something for them, and there would be nothing left of the contracts initially signed with the landowner. And there would then be a big legal battle to decide what rent (if any) would be payable, who was liable for rates and who was liable to clean the site up at the end of the 25 years.

One thing I have learned in my life is never ever ever ever rely on the State to keep its promises long term. The promises the State makes last about as long as the careers of the politicians making the promises, and not always even that long. Once someone gets in power who had nothing to do with the previous decision all bets are off, and you will be sold down the river without so much as a backward glance, however many solemn promises were made by his or her predecessors.
 

Exfarmer

Member
Location
Bury St Edmunds
Who does a farmer with solar panels on his land have a contract with? The Government? No. The electric supply companies? No. Some tinpot solar development company thats been set up by a bunch of get rich quick merchants? Bingo.

The entire industry is based on no future government ever changing the rules of the game. Which given if you take any 25 years period in postwar UK history and compare the beginning and the end of that period
you won't find one where the entire level of taxation, general thrust of public policy and government involvement in the economy hasn't altered drastically.

If a Government of the future wants to change the rules they will find a way. They write the laws after all. And if the current laws prevent them from doing what they want, they'll make new ones that allow them to get what they desire. And all the solar development companies (and other renewable energy developers too) would go bust overnight, the assets sold to whoever would pay something for them, and there would be nothing left of the contracts initially signed with the landowner. And there would then be a big legal battle to decide what rent (if any) would be payable, who was liable for rates and who was liable to clean the site up at the end of the 25 years.

One thing I have learned in my life is never ever ever ever rely on the State to keep its promises long term. The promises the State makes last about as long as the careers of the politicians making the promises, and not always even that long. Once someone gets in power who had nothing to do with the previous decision all bets are off, and you will be sold down the river without so much as a backward glance, however many solemn promises were made by his or her predecessors.

Anyone who has not got a rock solid contract with revert to Landlord built in has only himself to blame. If I owned one the prospect of the company going bust would make me rib my hands with glee. The average outfit will be generating £12,500 per acre, at wholesale rates, with no subsidy, very nice to get your hands on. Sadly for the owners there is no way the banks would be stupid enough to do that.
They may try to force rents down but as said if you had the contract drawn properly. Including upward only rent reviews, you are safe.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
Who does a farmer with solar panels on his land have a contract with? The Government? No. The electric supply companies? No. Some tinpot solar development company thats been set up by a bunch of get rich quick merchants? Bingo.

The entire industry is based on no future government ever changing the rules of the game. Which given if you take any 25 years period in postwar UK history and compare the beginning and the end of that period
you won't find one where the entire level of taxation, general thrust of public policy and government involvement in the economy hasn't altered drastically.

If a Government of the future wants to change the rules they will find a way. They write the laws after all. And if the current laws prevent them from doing what they want, they'll make new ones that allow them to get what they desire. And all the solar development companies (and other renewable energy developers too) would go bust overnight, the assets sold to whoever would pay something for them, and there would be nothing left of the contracts initially signed with the landowner. And there would then be a big legal battle to decide what rent (if any) would be payable, who was liable for rates and who was liable to clean the site up at the end of the 25 years.

One thing I have learned in my life is never ever ever ever rely on the State to keep its promises long term. The promises the State makes last about as long as the careers of the politicians making the promises, and not always even that long. Once someone gets in power who had nothing to do with the previous decision all bets are off, and you will be sold down the river without so much as a backward glance, however many solemn promises were
.

Very well put and what I was trying to get across. 25 years is eternity in politics
 
Last edited by a moderator:

Clive

Staff Member
Arable Farmer
Location
Lichfield
Anyone who has not got a rock solid contract with revert to Landlord built in has only himself to blame. If I owned one the prospect of the company going bust would make me rib my hands with glee. The average outfit will be generating £12,500 per acre, at wholesale rates, with no subsidy, very nice to get your hands on. Sadly for the owners there is no way the banks would be stupid enough to do that.
They may try to force rents down but as said if you had the contract drawn properly. Including upward only rent reviews, you are safe.

If the company went bust I reckon the landlord would be a long way down the list of creditors

A contact with a bankrupt company is worthless
 

Exfarmer

Member
Location
Bury St Edmunds
I am surprised at this. Whenever I have let land, I always place a reversion to landlord in the agreement.
Any fixed property automatically becomes the landlords property I irrespective of other claims.
Have been in this situation more than once.
Strangely while prospective tenants may baulked at the clause it protects them as creditors are less likely to make them bankrupt.
In fact I had to do it myself once so I could reclaim goods to cover my costs, but tenAnt had disappeared.

Any equipment PV and turbines have no second hand value anyway as they cannot be reused on another site

Why anyone is worried about clearing the site beats me, when they will. Be generating so much power beats me.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
Dont get what you mean if inheritance relief was taken away it would be taxed on death or life time transfer. Or capital gains if selling

IHT relive is what keep land values at the artificially high levels - if it was removed then land would be worth much less and therefore easier for farmers to buy, at a lower value the tax burden when a generation past would not be so bad either

as a farmer this wouldn't be bad news for me but not so good if your a investment landowner
 

rob1

Member
Location
wiltshire
IHT relive is what keep land values at the artificially high levels - if it was removed then land would be worth much less and therefore easier for farmers to buy, at a lower value the tax burden when a generation past would not be so bad either

as a farmer this wouldn't be bad news for me but not so good if your a investment landowner
That is very true so perhaps we should campaign for it, Just pass on what we own now before it happens:) would lead to a more fluid land market and that would be a good thing
 

milkloss

Member
Livestock Farmer
Location
East Sussex
Ok to lease to a solar operator the going rate is £900/acre. Say a site of 50 acres means £45,000/year x 25 yr term = £1,125,000.

What can the land earn growing crops over the same term?

Growing a rotation of 3 crops, which might change admittedly but we need a comparison somehow so the 3 main crops would be wheat, oilseed rape and barley?

ww, 3.5t/ac x £150/t - £180 inputs - £150 contractor = £195
£195/ac + average sfp over the next 25 years say £50/ac? = £245/acre
£245/ac x 50ac x 8.3 wheat crops = £101,675

wosr, 1.5t/ac x £300/t - £180/ac inputs - £150/ac contractor = £120/ac
£120/ac + average sfp over the next 25 years say £50/ac? = £170/acre
£170/ac x 50ac x 8.3 wheat crops = £70,550

wbarley 3t/ac x £150/t - £180/acre input - £150/ac contractor = £120/ac
£120/ac + average sfp over the next 25 years say £50/ac? = £170/acre
£170/ac x 50ac x 8.3 wheat crops = £70,550

Total earning off crops £242,775

Feel free to tweak the figures as the above is merely a starting point. Plently of people are doing the machinery bit a lot less than a contractor and plenty will be getting better yields.

What are the tax implications of leasing the land to a solar operator?

I won't bother posting the comparison with growing sheep, makes pv look like winning the lottery!
 

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