INFORMATION FOR INVESTORS

Shares in SCR can attract substantial tax benefits for UK taxpayers through HMRC’s Enterprise Investment Scheme (EIS), together with an annual return on investment similar to a savings account.

1. TAX RELIEF

What are the benefits for me as a taxpayer?

If you are a UK taxpayer, you will be able to reclaim a significant proportion of the sum you invest from HMRC,subject to HMRC rules on eligibility. The actual amount of tax relief you can claim will depend on your personal tax circumstances.

We have received ‘advance assurance’ from HM Revenues and Customs (HMRC) that the shares in SCR are eligible for tax relief under the Enterprise Investment Scheme (EIS) which is a government-backed schemes designed to encourage investment in smaller enterprises.

Under the EIS, investments attract tax relief at 30% of the sum invested. So, provided you are a UK taxpayer, you should be able to recover up to this amount of your investment from HMRC in the year after SCR starts trading, i.e. when the Society starts earning revenue from the sale of generated electricity.

EIS may have a significant impact on your overall financial return as an investor as the figures below, which factor in tax relief as well as interest illustrate.

After 5 Years10% average annual return

After 10 years7% average annual return

The figures above are based on the following assumptions for the calculation of a simple return percentage:

  • That income from interest is calculated from date of first generation (e.g. the end of Year 1 is 12 months after the start of generation currently planned to be November 2015)
  • That no account has been taken for depreciation, inflation, internal rates of return.
  • That an investor who is a UK taxpayer is able to qualify for 30% tax relief for their investment
  • That all interest payments are 'gross' income (no deductions have been made for the income tax situation of individual investors)
  • That it continues to rain as usual allowing the 4% interest payments!

How long do I have to leave my investment in SCR to qualify for Tax relief?

The rules for EIS tax relief require the investment to be held for at least 3 years from the start of trading (not the date of the investment).

How do I obtain Tax relief on my investment?

Four months after SCR has commenced trading we will request the forms that investors will need to use to get their tax refund.

Applications for tax relief are made to HMRC by you, the investor, not by Sunart Community Renewables, and so we cannot give any guarantees. HMRC’s information site, explains the application procedures but, if you are unsure, please seek professional advice.

2. INTEREST

What interest can I expect on my investment?

Shareholders will receive an annual payment of interest on the value of their shares which will be accrued from the date of commissioning i.e. when the Hydro Scheme is commissioned, which is expected to be in November 2015.

Payment will be made after the first full year of generating electricity. The level of interest is recommended by the Board of Directors and agreed with the Members of SCR at their Annual General Meeting; it is anticipated that the interest rate will average 4% per annum. Investment returns offered by Community Benefit Societies like SCR are capped by the co-operative legislation. The maximum level of interest is limited to 2% over the Cooperative Bank’s base rate or 5%, whichever is higher.

Interest on the shares is paid gross so it is the investor’s responsibility to declare these earnings to HMRC. In addition to the interest paid on share holdings, investment in these shares may qualify for tax relief (see section 1 above).

Because our primary objective is to benefit local communities, this rate of return is not directly linked to the profits SCR generates.

3. OTHER INFORMATION

What happens to my shares if I die?

If a Member dies the repaid value of the shares will normally be added to the estate for probate purposes. We have an application form which offers the option for you to nominate a recipient for the value of the shares in the event of your death.

How are shares allocated?

Shares will be allocated on a first come, first served basis at the discretion of the Directors. If SCR is over-subscribed, the Directors will close the share offer early and advise unsuccessful applicants whose investment will be returned in full.

What does ‘withdrawable shares’ mean in practice?

The society (SCR) allows shareholders to withdraw their share capital, but three months’ notice is required and withdrawal is subject to the terms and conditions that protect the society’s financial security. Shareholders have a share account, and can decrease their shareholding, or close the account altogether by withdrawing all their share capital.

How does the stated plan to buy back shares affect my investment?

The Directors have made provision for shares to be withdrawn from year 3 if an investor wishes to do so, and may also offer some investors the opportunity (each year from year 5) to sell back some of their shares to the Society. However this is voluntary and investors who wish to leave their investment in the society for the medium and longer term and thereby benefit from the interest offered will be able to do.

Will the value of my shares change?

The value of each share will remain unchanged at £50 and, unlike the ‘ordinary shares’ typical of a limited company, they cannot be sold, traded or transferred between Members or the wider public. They can only be sold back to SCR. You must understand that shares in SCR will never increase in value. On the other hand, their value could be reduced to zero if the enterprise fails.

While investors can expect a reasonable return on their investment, investing in Sunart Community Renewables Ltd should be seen as more of a social investment, than a financial one.