Here are a few questions we have been asked about our Share Offers and the answers which will hopefully be useful to others. These are clarifications only and the Share Offer Document remains the sole source of information on which to make a decision to invest.
Some of these questions relate to tax, so it’s appropriate for us to add a disclaimer here:
The Big Solar Co-op does not provide tax or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax or legal advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Is there a minimum age to hold these shares?
Yes, it’s 16 – set by our Rules.
Can I buy shares for grandchildren? In their name?
In past share offers some Societies offered this option, whereby the shares automatically passed to the children in their own name when they reached 16. However the mechanism for doing this is complicated, and has now been made more onerous by the additional data protection considerations around minors under data protection law, so we are not currently offering it. Shares under this offer can be left to grandchildren in a will and in principle do not attract Inheritance Tax.
Is there a return of capital after a period of time?
The principle we are following is that we make it as easy as possible for investors to get their capital out if they need it, but we don’t return capital routinely unless the Society has no need for it.
Members can apply at any point for return of all or part of their capital and we will look to meet that request either from reserves or by issuing new shares.
The financial model in the share offer document shows a scenario where after a growth period we start winding down new solar installations, in order to illustrate that at that point we would begin returning capital to all members on a pro-rata basis. In practice of course that point may come earlier or later in time.
We should add that these capital repayments, like interest payments, will always be made from earned reserves and not from new investments.
Are these shares subject to Inheritance Tax?
Our shares are the same as those issued by most other community energy schemes in this regard. Withdrawable share capital in Societies is usually exempt from Inheritance Tax in the same way as shares in unlisted companies are:
https://www.uk.coop/resources/community-shares-handbook/8-tax-treatment/86-inheritance-tax
For taxation will the ‘interest’ be counted as dividends or interest?
Our understanding is that the relevant tax allowance is that on interest not on dividends. We have lobbied HMRC on this in the past but were not successful!
Society shares are different to company shares and the language is also different. The return we pay on share capital is called interest. If you’d like more background on this distinction there is a useful page here:
https://www.uk.coop/resources/community-shares-handbook/1-share-capital/11-community-shares