Hydro EIS – The Regulatory Doors Close Soon

by | Mar 4, 2015

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Tax-efficient investment specialists Deepbridge Advisers has announced that the Deepbridge Hydro EIS will close on Thursday 26th March. This is in line with a change in government policy which comes into effect on 6th April.


 

As announced in the Chancellor’s AutDeepbridge Capitalumn Statement, renewable energy projects which benefit from government subsidies will cease to qualify for EIS status at the end of the current tax year.  Deepbridge has therefore announced that this last renewable energy EIS opportunity will close one working week before the of the tax year.

Deepbridge state that this would then allow time to deploy funds before the end of the tax year, thereby potentially allowing investors to qualify for the fund and the potential tax incentives in the 2014/2015 tax year and relevant carry back. Such incentives cannot be guaranteed and will depend on personal circumstances, and may also be subject to change in the future.

The Deepbridge Hydro EIS is a discretionary managed portfolio service, and represents an opportunity for UK taxpayers to invest in a portfolio of EIS-qualifying investee companies aiming to generate generating long term, stable returns from the operation of hydro-electricity generating projects in the UK.

 Why the Government is pulling the plug on renewable energy qualifying for EIS:

Ian Warwick, Managing Director at Deepbridge Advisers, explains: “As the UK reaches its renewable energy obligation targets, it was inevitable that the Government would eventually rule that renewable energy projects are to no longer qualify for EIS status.  By 2020, 15% of UK energy has to be produced from renewable sources and statistics show during Q3 2014 this figure stood at 17.8% [Source: UK Government Energy Trends Report, 9 January 2015]. Some have suggested this is a short term anomaly; but even if that is the case the longer term trend is on an upwardly mobile trajectory and, following the trend of the past 5 years, the UK target of 15% would be hit by 2016 anyway.

“This increase in volume of EIS investments in renewable energy is not surprising.  The government subsidies on offer to renewable energy generators can mitigate investment risk in such unquoted companies.  In addition, The Chancellor increased the maximum EIS investment per company to £5m and thus made this market increasingly interesting for investment managers.

“EIS purists may argue that renewable energy projects don’t necessarily create the level of jobs intended when EIS was launched, but there is no denying the adoption of EIS for renewable energy projects has significantly assisted the UK’s Renewable Obligations agreed in 2002.

“Investors looking to invest in renewable energy EIS propositions have until the end of the 2014-2015 tax year to do so before these opportunities cease to be EIS qualifying.  However, renewable energy will continue to be an appealing investment opportunity for some.  With reduced nuclear power in the UK, a number of coal power stations to close in the next few years and with Northern Ireland only half way to their 2020 target of 40% generation from renewables; there could still be good reasons to invest in renewables.  Renewable energy is here to stay: the increasing political focus on energy security amidst rising geo-political instability will be major focus of the energy policy for the forthcoming Government.

“The Deepbridge Hydro EIS is attracting phenomenal interest from advisers and private investors looking to take advantage of this last opportunity to invest in Government subsidised renewable energy projects under EIS. We have a £10m capacity and expect to fill this, so we recommend interested advisers contact us at the earliest opportunity.  We require cleared funds by close of business on the 26th March to ensure deployment of funds in this tax year.”

 Please note that Deepbridge Advisers Ltd and Sapia Partners LLP, the Investment Manager, do not provide legal, financial or taxation advice.

 

For further information please contact:

Andrew Aldridge, Head of Marketing, Deepbridge Capital LLP

andrew.aldridge@deepbridgecapital.com

07734 664313

 

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