No Upfront Cost / Fully Funded

"Fully funded" is a promise, not a product

No upfront cost, fully funded, 100 per cent finance, zero deposit: these are the phrases business owners hear most, and they are marketing labels rather than distinct products. Every one of them resolves to something already on this site. Usually it is a Power Purchase Agreement, where a funder owns the system and you buy the power, or it is 100 per cent finance through hire purchase, asset finance or a green loan, where you own the system and repay from the energy saving. The shared pitch is that the saving covers the payment, so the system pays for itself from day one and no cash leaves your account to get it installed. That can be a sensible trade, but the label tells you nothing until you find the structure beneath it.

The two structures underneath

Under a PPA, the funder pays for and owns the panels, inverters and installation, and you sign a long agreement, often 10 to 25 years, to buy the power at an agreed unit rate below your grid price. You put in no capital and carry no maintenance responsibility, but because you never own the asset during the term, the tax relief and any export income sit with the funder. Under 100 per cent finance the picture inverts: a lender advances the full cost, you repay over a fixed term, commonly two to seven years, and you own the system, so the savings, the tax relief and the export income are yours. The monthly repayment is a real debt on your books until the term ends, after which the generation is effectively free for the rest of the panels' life.

Why the structure decides the tax

Ownership decides who benefits from the reliefs. Solar is special-rate plant, so it never qualified for full expensing; it does qualify for the Annual Investment Allowance, giving 100 per cent first-year relief on up to £1m of qualifying spend, which covers most installs, with the 50 per cent special-rate first-year allowance for company spend above the cap. Under 100 per cent finance you own the asset and claim all of that; under a PPA the funder owns it and claims it instead, which is part of how the funder makes its numbers work. The same split applies to Smart Export Guarantee income. VAT at 20 per cent is reclaimable if you are VAT-registered. This is general information, not advice, so confirm your own position with your accountant.

The question to ask

Read past the "zero cost" headline to the structure. Ask who owns the asset, who keeps the tax relief and export income, what it costs over the full term against just buying, and how you exit. On a PPA check the annual escalator, the tie-in length and the buy-out schedule; on finance check the total repayable, any balloon and the early-settlement terms. In almost every case, zero upfront means giving up some ownership, tax relief or lifetime return in exchange, so it should be a decision made with the full-term numbers in front of you. Model a PPA against 100 per cent finance for your building in the finance calculator, then see the gap in pounds on the payback and ROI page.