Mixed farm: 80 kWp bought outright with AIA relief, and where the Farming Investment Fund fits

A mixed-farming business with grain drying, cold storage for produce, workshop equipment and a farmhouse-office load wanted to cut a heavy and rising electricity bill, particularly through the drying season. With large barn roofs, a strong daytime demand and cash available from a good harvest, it bought an 80 kWp system outright and claimed the year-one capital allowance, while looking honestly at whether any grant could help.

The funding structure

The farm paid the full installed cost from its own funds and owned the system from commissioning. As a VAT-registered business it reclaimed the 20% input VAT through its normal return. Buying outright meant no lender, no interest and no term, and the farm kept every pound of saving, all the export income and the entire capital allowance.

At an indicative 2026 cost of around £850 per kWp, the 80 kWp system came to roughly £68,000 before VAT. That sum sat well under the £1m Annual Investment Allowance cap, so the whole qualifying spend attracted 100% first-year relief.

The numbers

The system generates around 76,000 kWh a year across Lincolnshire’s good solar resource. With grain drying, refrigeration and workshop use concentrated in daylight and through the harvest peak, self-consumption sits at about 74%, so roughly 56,200 kWh is used on site displacing grid power at 28p a unit, worth about £15,740. The remaining 19,800 kWh is exported under the Smart Export Guarantee at an indicative 15p, adding about £1,970. Together that is a gross annual benefit near £17,700.

On tax, the farm claimed the full AIA on the qualifying cost, and at 25% corporation tax that returned roughly £17,000 against its year-one tax bill, cutting the net cost to about £51,000 once the allowance and reclaimed VAT are counted. Against that net cost a gross benefit near £17,700 a year gives a simple payback of about three years, or roughly four years measured against the full pre-relief price, after which the system generates for two decades more.

Why the Farming Investment Fund is only a footnote here

Farm businesses often ask about the Farming Investment Fund, which in earlier rounds funded solar where it was integrated with productive farming, for example powering grain drying or refrigeration. Honesty matters here: on gov.uk the specific rounds that funded solar PV, the Improving Farm Productivity grant and the Farming Equipment and Technology Fund, are shown as closed to applications, a new Capital Grants offer was scheduled to open in July 2026 but its solar-PV eligibility was not confirmed at the point of writing, and the fund is farm-business-only and England-only. So this farm did not build its decision around a grant it might not get. It treated any future award as a bonus to check for when a window actually opens, not as part of the sums, and funded the system on the reliefs that are certain: the AIA and the VAT reclaim.

Why this route suited them

Buying outright suits a business with spare cash, a settled site and a tax bill big enough to use the year-one allowance in full, and a farm coming off a strong harvest often fits all three. Ownership gave the farm the maximum lifetime return with no lender margin eating into it, on an asset that will outlast most of the machinery it powers. Sizing the array to the drying and refrigeration load, rather than to the acreage of available roof, kept self-consumption high, which is where the economics really come from. For an owner who could spare the capital and wanted the biggest long-run return, outright purchase was the clear choice, with any grant treated as a possible extra rather than a plan.

Model this against your own electricity spend in the finance calculator, then get costed quotes when you are ready.