50% First-Year Allowance for special-rate plant for business solar
Applies in some casesCompanies get a 50% first-year allowance on commercial solar panels — NOT 100% 'full expensing', because HMRC classes solar PV as special-rate plant.
Who qualifies
Companies within the charge to Corporation Tax only (this FYA is not available to sole traders or partnerships — they use AIA instead). Applies to new/unused special-rate plant and machinery, which by law includes solar panels. The alternative 100% 'full expensing' is explicitly NOT available for special-rate assets, so solar panels fall to the 50% rate rather than 100%.
How much it is worth
50% of the qualifying special-rate (solar panel) expenditure is relieved in year one; the remaining 50% is written down at the 6% special-rate writing-down allowance in subsequent years. In practice most SMEs relieve solar in full via AIA first (100% up to £1m); the 50% FYA matters mainly for companies whose total qualifying spend in the year exceeds the £1m AIA cap. Note the Budget 2025 'new 40% first-year allowance' from 1 January 2026 applies ONLY to MAIN-rate expenditure — it does NOT apply to solar/special-rate plant, which keeps its separate 50% FYA.
Where it stands in 2026
Live and permanent for companies. Full expensing (100%) and the 50% special-rate FYA were made permanent from April 2023. The 50% rate for special-rate assets (solar) is UNCHANGED by Budget 2025. Two Budget-2025 changes to be aware of but which do NOT change solar's 50% FYA: (1) a new permanent 40% FYA for MAIN-rate expenditure from 1 January 2026 (solar is special-rate, so excluded); (2) the MAIN-rate writing-down allowance falls from 18% to 14% from April 2026 (again main-rate only — solar sits in the 6% special-rate pool, unaffected).
How to claim the 50% First-Year Allowance for special-rate plant
- 1Claimed by companies via the Company Tax Return (CT600) — no separate application.
- 2Identify the special-rate element (the solar panels) on the installer invoice, separately from any main-rate/AIA-eligible plant.
- 3Decide with your accountant whether to relieve solar via AIA (100% up to £1m) or the 50% FYA — AIA is usually better up to the cap; the 50% FYA is the fallback for spend above £1m.
- 4Balance of special-rate cost after the 50% FYA is written down at 6% per year in the special-rate pool.
Key facts, checked against official sources
- HMRC CA22335: solar panels designated special-rate expenditure from 1 April 2012 (Corporation Tax) / 6 April 2012 (Income Tax).
- gov.uk confirms: 'Companies cannot claim full expensing for special rate assets, such as… solar panels' — they qualify for the 50% special-rate allowance instead.
- 50% relieved in year one; remaining 50% written down at 6% per year (special-rate pool).
- The new 40% FYA from 1 January 2026 (Budget 2025) is for MAIN-rate expenditure only and does NOT apply to solar; the 18%→14% main-rate WDA cut (April 2026) also does not affect solar's 6% special-rate pool.
- This FYA is available to companies only, not sole traders or partnerships.
Reliefs like this change the true net cost of every funding route. Model it in the finance calculator, or see how it fits alongside the other options on the grants & funding hub.
Sources
- https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca22335
- https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23174ac
- https://www.gov.uk/government/publications/new-first-year-allowance-and-main-rate-of-writing-down-allowances/capital-allowances-new-first-year-allowance-and-reducing-main-rate-writing-down-allowances
- https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar