Households with green energy to get £900

People who generate electricity from home wind turbines and solar panels will not have to pay tax on the money they make by selling it to the national grid, the Chancellor announced in the pre-Budget report.

From April 2010, the £900 a year they typically make from electricity sales to the grid under so-called ‘feed-in tariffs’ will be tax-free. This will save a basic-rate taxpayer £180 a year and a higher-rate taxpayer £360 a year.

The government also announced that it would take steps to encourage poor households to generate their own electricity.

Although home generation equipment often pays for itself over its lifetime, the Treasury said, the initial costs can discourage low-income families from installing it.