Solar panel tax relief: what a UK business can claim, and who claims it

Solar panel tax relief: the short answer

Solar panel tax relief for a UK business comes mainly through capital allowances. HMRC designates all capital expenditure on solar panels as special rate expenditure, and GOV.UK describes the main allowance, the Annual Investment Allowance (AIA), as letting you deduct the full value of a qualifying item from your profits before tax. For most businesses that means the whole cost of a system, within a limit of £1 million of qualifying spending per accounting period, can come off taxable profits in the period it is bought. Companies that spend more than that get a 50% first-year allowance on the excess, and anything still unrelieved goes into the special rate pool at 6% a year.

The relief belongs to whoever pays for the system and is treated as owning it, so the finance route matters as much as the allowance. A business that buys the panels outright, or with a loan, claims them. A business that rents them on an ordinary lease, or buys the electricity from a provider that owns them, usually has no asset of its own to claim on, and its payments are treated as running costs instead. Around the allowances sit four other tax effects: VAT on the installation, business rates, the Climate Change Levy on the grid power the panels replace, and tax on income from exported electricity. This guide works through each one, by type of business and by finance route, with the traps that catch people out.

Is there a solar panel tax credit for business in the UK?

Not in the form the phrase suggests. Much of what appears online under "solar tax credit" is written for the United States and does not apply here. In the UK the relief for a business that pays for solar panels is capital allowances. GOV.UK calls them a type of tax relief for businesses that lets you deduct some or all of the value of an item from your profits before you pay tax, and HMRC's policy paper describes them as allowing businesses to write off the costs of capital assets, such as plant or machinery, against their taxable income. A deduction from profit is worth the amount deducted multiplied by the rate of tax those profits would otherwise have paid: for a company paying the 25% main rate of corporation tax, £1 of allowance saves 25p of tax. So whether it is searched as a "business solar tax credit", a "solar business tax credit" or a "commercial building solar tax credit", for a UK project read it as shorthand for capital allowances and check which allowance is meant.

Are solar panels tax deductible?

Yes, but for a company, and for a sole trader or partnership using traditional accounting, the purchase price is not deducted like a bill. It is capital spending, relieved through capital allowances. The depreciation charged in the accounts is not the relief either: the government's policy paper on the 2026 changes says capital allowances take the place of commercial depreciation, which is not allowed for tax. Sole traders and partnerships using the cash basis follow different rules, covered below. The rest of this guide explains how much relief is available, when it arrives and who gets it.

Capital allowances: the main solar panel tax relief

Why solar panels are special rate plant

With effect from 1 April 2012 for corporation tax and 6 April 2012 for income tax, all capital expenditure on providing solar panels has been specifically designated as special rate expenditure (HMRC Capital Allowances Manual, CA22335). HMRC explains that the designation was made for clarity: before then, photovoltaic and solar thermal systems were generally treated as special rate anyway, as integral features of buildings or as long-life assets. GOV.UK's guide to writing-down allowances lists solar panels among the items that get 6% relief in the special rate pool. That one classification drives almost everything else on this page. It is why solar gets the 50% first-year allowance rather than full expensing, and why the new 40% allowance from 2026 does not reach it.

The Annual Investment Allowance: 100% on up to £1 million

The AIA is the relief most businesses use for solar. It covers most plant and machinery, and it covers special rate items: GOV.UK's full expensing guidance notes that expenditure on special rate plant or machinery may qualify for the 100% annual investment allowance. The AIA amount is £1 million. A business gets a new allowance for each accounting period, scaled for periods longer or shorter than 12 months, so a 9-month period gets 9/12 of £1,000,000, which is £750,000.

The AIA is open to companies, sole traders and partnerships, with limits on who shares it. A partnership can claim only if all of its members are individuals, so a partnership with a company as a member gets no AIA. Two or more limited companies controlled by the same person get one AIA between them and can choose how to share it. A sole trader or partnership with more than one business usually gets an AIA for each, unless the businesses are controlled by the same person and share premises or have similar activities. The AIA is not available on items bought in the final accounting period before a business closes. If profits are low, GOV.UK says you do not have to claim the full cost: you can claim writing-down allowances instead, or part of the cost as AIA and part as writing-down allowances. The Annual Investment Allowance guide covers the limits in more detail.

Above the AIA: the 50% first-year allowance, for companies only

Where a company's qualifying spending in a period goes past the AIA, the excess spent on new special rate plant can get the 50% first-year allowance. GOV.UK sets the conditions. The claimant must be a company subject to corporation tax, the expenditure must be incurred on or after 1 April 2023, and the plant must be new and unused, not a gift, and not bought to lease to someone else unless it is background plant or machinery within a building. For special rate plant, half the cost is deducted in the first year and the balance is added to the special rate pool in the following accounting period, where it earns writing-down allowances. Sole traders and partnerships cannot claim it.

The special rate pool: 6% a year

Spending that the AIA and the 50% allowance do not cover goes into the special rate pool, which attracts writing-down allowances of 6% a year. The 2026 changes cut the main pool rate from 18% to 14%, from 1 April 2026 for corporation tax and 6 April 2026 for income tax, but HMRC's policy paper says the measure does not change the special rate pool, which stays at 6%. At that rate relief is slow, which is why the AIA matters so much for solar.

Why solar panels never get full expensing

Full expensing lets a company deduct the whole cost of new main rate plant in the year of purchase. Solar panels are not main rate plant. GOV.UK spells out the split: if your claim is for main rate plant or machinery you can deduct all of the cost under full expensing, while for special rate plant or machinery you can deduct half of the cost under the 50% first-year allowance. Because HMRC designates solar panels as special rate, an array always falls on the 50% side of that line, whoever installs it and however large it is. A company that wants 100% relief on solar in year one has to use the AIA. The guide to full expensing and the 50% first-year allowance sets out the conditions in full.

Why the 40% first-year allowance from January 2026 does not apply

A 40% first-year allowance, announced at Budget 2025, is available for expenditure incurred from 1 January 2026 and is designed to reach businesses that full expensing misses, including unincorporated businesses and assets bought for leasing. It is for main rate expenditure only. HMRC's policy paper describes it as a first-year allowance of 40% for main rate expenditure and says the measure does not change the special rate pool, and GOV.UK's guide lists qualifying for the main rate of writing-down allowance as a condition. It therefore does nothing for solar panels, and a sole trader or partnership that spends more than the AIA on solar still has only the 6% pool for the excess.

What happened to the super-deduction

The super-deduction was a temporary allowance that let a company deduct up to 130% of the cost of qualifying new plant from its profits. Alongside it ran a separate 50% special rate first-year allowance. Only companies could claim either, both applied to plant bought from 1 April 2021 up to and including 31 March 2023, and a company could not claim both on the same expenditure. Solar panels are special rate plant, which is the category the 50% special rate allowance was named for. Neither temporary allowance is available on anything bought now. For spending since 1 April 2023 a company looks to the AIA first and then to the 50% first-year allowance, so for anyone searching for "super deduction solar panels" today, the relief to look at is the AIA, then the 50% first-year allowance.

Who can claim solar panel tax relief

Capital allowances go to the person who incurs the capital expenditure and is treated as owning the asset. Roof-mounted panels complicate that, because HMRC normally regards solar panels as fixtures: assets installed or fixed in or to a building or land so as to become part of it in law. In law a fixture belongs to the freeholder, so without special rules a tenant who paid for panels could never claim. The fixtures rules in Chapter 14 of Part 2 of the Capital Allowances Act 2001 deal with that by treating a person who incurs capital expenditure on a fixture as its owner for allowance purposes, provided allowances do not go to more than one person at the same time. Who that person is depends on the business's position.

Owner-occupiers

A business that owns its premises and pays for the system is the simplest case. Section 176 treats a person who incurs capital expenditure on plant for its own qualifying activity, where the plant becomes a fixture and the person has an interest in the land at that time, as the owner of the fixture. The freehold is an interest in land for these rules, so the owner-occupier claims the AIA, the 50% allowance if it is a company, and the 6% pool in the ordinary way.

Tenants who pay for the installation

A lease is also an interest in land for the fixtures rules, so a tenant that pays for panels on the building it occupies can be treated as their owner under section 176 and claim the allowances, even though the landlord owns the building. HMRC's manual says the fixtures rules apply to both tenant's and landlord's fixtures, and GOV.UK's summary is short: you can claim if you rent or own the building, but only the person who bought the item can claim. Two cautions apply. Where two or more people with different interests in the land would each qualify, only one interest is taken into account. And when the tenant's lease expires, the tenant ceases to own the fixture: the disposal value is any capital sum it receives by reference to the fixture, and otherwise nil. Before signing, read whether a tenant can install solar panels and check the green lease clauses on alterations and reinstatement.

Landlords and the dwelling-house rule

A landlord that pays for panels on a building it lets can claim in the same way, with one large exception. Expenditure on plant or machinery for use in a dwelling-house is not qualifying expenditure for a UK property business (Capital Allowances Act 2001, section 35). HMRC's own example is solar: if a landlord installs ground-mounted panels in the garden of a house he lets and the electricity is used in that house, the expenditure does not qualify. The restriction is narrower for larger buildings. A block of residential flats is not a dwelling-house, although each flat in it is, and a lift or heating system serving the common parts of a building with two or more dwellings is not part of any dwelling-house. Plant used partly in a dwelling-house and partly for other purposes is apportioned. GOV.UK's summary for residential landlords is that you can only claim for items in a residential building if the building has multiple residential units, like a block of flats, and the item is used in a communal part of the building. Shops, offices and industrial units are not dwelling-houses, which matters for a landlord deciding whether to fund panels itself or rent the roof to a provider.

Sole traders and partnerships

Unincorporated businesses get the AIA on the same £1 million limit, so most sole traders and partnerships can relieve a solar system in full in the period of purchase. They cannot get the 50% first-year allowance, which is for companies only, so anything above the AIA goes to the 6% pool. A partnership with a company as a member cannot claim the AIA at all. If a sole trader or partner also uses an asset outside the business, the allowances are reduced by the private use and the asset goes into its own single asset pool; GOV.UK's example is a laptop used privately half the time, where the claim is cut by 50%. That apportionment needs care on a building that is partly a home. Sole traders and partnerships using the cash basis are in a different position: GOV.UK says that if you use cash basis you can only claim capital allowances on business cars, so ask your accountant how the cost of a system is relieved before relying on the figures here. The guide to solar finance for sole traders covers the borrowing side.

Solar panel tax relief by finance route

The most common mistake is assuming the tax relief follows the business that benefits from the panels. It follows the asset. The table summarises who claims under each route, and the sections below explain the conditions.

Route	Who claims the capital allowances	What the business gets	Main trap
Cash purchase or business loan	The business	AIA, then the 50% allowance (companies) or the 6% pool	One AIA shared by companies under common control
Hire purchase	Whoever the fixtures rules treat as owner	Allowances if the business is that owner; HP interest is not part of the claim	The HP "treated as owner" rule does not apply to fixtures
Lease that is not a long funding lease	Not the business; a lessor needs a joint election to claim on a fixture	Rentals, most of them on revenue account	Testing whether the lease is a long funding lease
Long funding finance lease, including a sale and finance leaseback	Can be the lessee: GOV.UK allows claims on leased items under a long funding lease	No deduction for rentals above the finance charge	A sale and finance leaseback cannot be a short lease
PPA or energy as a service	The provider, through an interest in the land or a joint election	The charges for the power or the service	Nothing for the site to claim

Bought outright or with a business loan

If the business pays for the system, with its own cash or with money it borrows, it incurs the expenditure and claims the allowances on the cost. Borrowing does not change who incurred the expenditure. The loan interest is dealt with separately: GOV.UK lists interest payments or finance costs for buying assets among the business costs that are claimed as business expenses by sole traders and partnerships, or deducted from profits as a business cost by companies, rather than through capital allowances. This is the route that keeps the capital allowances with the business, which is why it is the usual benchmark when finance options are compared. See business solar loans and capital purchase for how the funding works.

Hire purchase: the fixtures caveat

For ordinary equipment, GOV.UK says that when you buy under a hire purchase contract you can claim, once you start using the item, for all the payments you will make under the contract, but not for the interest. Roof-mounted panels are different, because they are normally fixtures, and HMRC's manual says the hire purchase legislation does not apply to an asset that is a fixture. The fixtures rules can still apply to a fixture being bought on hire purchase, so a business with an interest in the building may well be treated as the owner, but it gets there through the fixtures rules, not the HP rule. If the fixtures rules do not treat the HP buyer as the owner, HMRC says the buyer is treated as ceasing to own the asset when it becomes a fixture and has to bring a disposal value into account. Ask the lender and your accountant how the agreement is structured before assuming ordinary HP treatment; the hire purchase guide covers the commercial terms.

Leases

Under a lease the finance company owns the panels and the business pays rent. GOV.UK says you cannot claim plant and machinery allowances on things you lease unless you have a hire purchase contract or a long funding lease, because you must own them. HMRC's leasing manual says most rentals are on revenue account, even under the new on-balance-sheet accounting described below; the operating lease guide explains how that route works. The lessor cannot simply claim allowances on panels fixed to a customer's building. For a fixture, an equipment lessor is treated as the owner only if it and the lessee are not connected persons and they jointly elect under section 177, and once that election is made the lessee cannot be treated as the owner under section 176.

Two further points. The long funding lease rules can change the picture: HMRC's manual says that under a long funding finance lease, rentals that exceed the finance charge are not allowable. Whether a particular lease is a long funding lease turns on its term and its terms, so the documents need checking. And the accounting has changed. The 2024 amendments to FRS 102 replace the previous version for accounting periods beginning on or after 1 January 2026, and require a lessee to recognise most leases on its balance sheet as a right-of-use asset and a lease liability. HMRC's manual says Schedule 14 to the Finance Act 2019 aimed to ensure that new or revised accounting standards did not change the tax treatment of lessees, and that the same basic principles remain, including the need to test whether a lease is a long funding lease. The balance sheet looks different; the tax analysis starts in the same place. Micro-entities applying FRS 105 keep the older model, under which a lessee recognises operating lease payments as an expense over the lease term.

PPA or energy as a service

Under a power purchase agreement or an energy-as-a-service contract the provider pays for and owns the system, and the business pays for the electricity or the service. The business has no asset and so nothing to claim capital allowances on. The charges are part of its day-to-day running costs, which GOV.UK says are claimed as business expenses, or deducted from profits as a business cost by a company, in the same way as a grid electricity bill. The provider's own claim depends on the fixtures rules. It may hold an interest in the land, such as a lease of the roof, which can bring it within section 176. If it has no interest in the land, section 180A lets an energy services provider and its client jointly elect for the provider to be treated as the owner of the fixture. The conditions include that the client has an interest in the land and the provider does not, that the plant is not provided for leasing or for use in a dwelling-house, that the provider or a person connected with it carries out the operation wholly or substantially, and that the two are not connected. For corporation tax the election must be made no later than two years after the end of the period in which the expenditure was incurred, and once it is made the client cannot be treated as the owner. See power purchase agreements and energy as a service for how the contracts work.

Sale and leaseback

In a sale and leaseback, a business that already owns a system sells it to a finance company and leases it back to release cash. Where the leaseback is a sale and finance leaseback, section 70I(10) of the Capital Allowances Act says the finance lease is not a short lease even if it otherwise would be, so the long funding lease rules can apply however short its term, subject to an election available in some cases under section 70I(11). Under a long funding finance lease, rentals above the finance charge are not allowable, so the business is in practice relieved on the interest element rather than the full rentals. Treat any leaseback offer as a tax question first and a finance question second.

Other solar panel tax benefits: VAT, rates, CCL and export income

VAT on the installation

VAT on an installation is charged at the standard rate, currently 20%, unless a relief applies: GOV.UK's rule is to use the standard rate unless the goods or services are classed as reduced or zero-rated. The 0% rate often quoted for solar is narrower than it sounds. HMRC's VAT Notice 708/6 applies a zero rate to installing energy-saving materials, which include photovoltaic panels with their cabling, control panel and AC/DC inverter, in residential accommodation and, from 1 February 2024, in a building intended for use solely for a relevant charitable purpose. Batteries for storing energy were added to the list from the same date. The zero rate applies to supplies made on or after 1 April 2022 in England, Wales and Scotland (1 May 2023 in Northern Ireland) and before 1 April 2027, and from 1 April 2027 these installations revert to the reduced rate of 5%. The notice is clear about the limits: the standard rate applies to installations in hospitals, prisons, hotels, inns and similar establishments, and energy-saving materials supplied without installation are standard-rated. Installing them during the construction of a new dwelling is zero-rated with the building. A VAT-registered business can reclaim VAT on items it buys for use in the business, through its VAT return. If an item is also for personal use, only the business proportion of the VAT can be reclaimed, and a business that sells a mixture of taxable and exempt goods or services is partly exempt and has to work out what it can reclaim. Mixed buildings, such as a shop with a flat above, are covered in VAT on solar panels in a mixed-use building, and recovery in the guide to reclaiming VAT on commercial solar.

Business rates

Rating valuation assumes that certain plant and machinery is part of a property. Regulations in each nation take renewable generation plant out of that assumption for a fixed period. In England, plant and machinery used or intended to be used for the generation, storage, transformation or transmission of power mainly or exclusively from renewable sources, which the regulations list to include photovoltaics, is excepted in relation to any day before 1 April 2035, under regulations in force from 1 April 2022. Wales has the same exception for days on or after 1 April 2024 and before 1 April 2035. In Scotland the exception runs from 1 April 2023 to 31 March 2035, and the explanatory note describes plant installed on a non-domestic property. In other words, during those years qualifying renewable generation plant is not treated as part of the property for rating valuation. These rules are about how a property is valued, so do not assume that an array owned by a third party, or a standalone installation, is treated the same way; take advice from a rating specialist. The business rates guide covers the detail.

Climate Change Levy on the grid power you no longer buy

The main rates of the Climate Change Levy are payable on supplies of electricity to businesses and public sector organisations and are added to energy bills by suppliers, much as VAT is. The main rate on electricity is £0.00801 per kWh from 1 April 2026. On-site solar affects it in two ways. Each kWh the panels supply is a kWh not bought from the grid, so no levy is charged on it. And HMRC's Excise Notice CCL1/3 says that where you are an auto-generator or exempt unlicensed supplier there is no requirement to account for CCL on self or direct supplies of renewable source electricity, a category that includes photovoltaics. A direct supply is one made under a contract involving only the generator and the customer, with no intermediary third party taking ownership of the electricity, which is why an on-site supply direct from a provider can fall outside the levy. Renewable electricity supplied by a utility, or by any other third party, is still a taxable supply, so buying green power through a supplier does not escape it. Supplies for domestic use, or for a charity's non-business activities, are excluded from the levy in any case.

Tax on Smart Export Guarantee income

Payments for exported electricity are income. HMRC's Business Income Manual does not discuss the Smart Export Guarantee by name, but its guidance on the export tariff under the feed-in tariffs scheme is that where the receipt is received by a person in a business capacity, the tariff is a business receipt on normal principles. Where it is received other than in a business capacity, HMRC says it will generally be chargeable as miscellaneous income unless the recipient is an individual and the income tax exemption in section 782A of the Income Tax (Trading and Other Income) Act 2005 applies. That exemption is the household position; it is not one a business receiving export payments in the course of its trade can rely on. Treat export payments as part of the business's taxable income unless your accountant advises otherwise. For rates and eligibility, see the Smart Export Guarantee guide.

Timing, claims and disposals

When the expenditure counts as incurred

The period of the claim depends on when the expenditure is incurred, not when the panels start generating. Section 5 of the Capital Allowances Act sets the general rule: capital expenditure is treated as incurred as soon as there is an unconditional obligation to pay it, even if some of it is not due until later. If an amount is not required to be paid until more than four months after the obligation becomes unconditional, it is treated as incurred on the date it is due. A separate rule covers an obligation triggered by a certificate or similar event within one month after the end of a period, where the asset has already become the buyer's by the end of that period: the expenditure is treated as incurred immediately before the period ends. GOV.UK's AIA guidance puts the practical version simply: you can only claim the AIA in the period you bought the item, and the date you bought it is when you signed the contract if payment is due within less than four months, or when payment is due if that is more than four months later. For a business near its year end, the contract date and the payment terms decide which period the claim falls in, so check how much AIA is left in each period before signing.

Selling the system or the building

Relief given up front can come back. GOV.UK warns that if you sell an item after claiming the AIA you may need to pay tax, and it asks you to record items claimed under the AIA or a first-year allowance in the pool they qualify for, written down to zero, so that a later sale can be dealt with. Where the 50% first-year allowance was claimed, HMRC's manual says a disposal triggers a balancing charge in the accounting period of the disposal; where the 50% allowance covered the full cost, the balancing charge is half of the disposal value, and the rest of the disposal value goes to the pool in the normal way.

When panels go with a building, the fixtures rules add traps for the buyer. GOV.UK's summary is that when you buy a building from a previous business owner you can usually only claim for the fixtures they claimed for, and you must agree the value of the fixtures with the seller or you cannot claim for them. The legislation behind that is specific. Under section 187A, where the seller was entitled to claim allowances on the fixtures, the buyer's expenditure on them is treated as nil unless the seller allocated its own expenditure to a pool in a period beginning on or before the day it ceased to own them, or claimed a first-year allowance on it. Where the fixed value requirement applies, the buyer also needs the value fixed, either by a joint election under section 198 or by a tribunal on an application made within two years. A section 198 election cannot fix more than the seller's original capital expenditure on the fixture, or more than the actual sale price. The guide to who claims capital allowances on solar panels walks through these hand-offs, and the capital allowances guide covers the pooling in more depth.

Freeports and Investment Zones

Companies investing in plant and machinery for use in a designated special tax site in a freeport or an Investment Zone can get a 100% first-year allowance, also known as an enhanced capital allowance. HMRC's manual sets the conditions. The company must be within the charge to corporation tax; the allowance is not available to businesses chargeable to income tax. The plant must be unused and not second-hand, and for use primarily in a special tax site at the time the expenditure is incurred. The expenditure must be incurred on or before the sunset date, which is 30 September 2031 for special tax sites in English freeports and 30 September 2034 for special tax sites in Scottish and Welsh freeports and all Investment Zones. There is also a later requirement that the plant remains primarily for use in the site for five years. Whether a particular solar array qualifies, and on what terms, is a question to settle with an adviser before relying on it.

An illustrative example: what the relief is worth

The figures below are illustrative only. They show the arithmetic, not what any real business will pay or save. The inputs are: a UK company with no associated companies and a 12-month accounting period from 1 April 2026 to 31 March 2027; taxable profits of £400,000 before any claim for the system; a solar system costing £120,000 excluding VAT, contracted and payable within the period, with any VAT assumed to be recovered; and corporation tax at the 25% main rate, which applies because profits stay above £250,000 with or without the claim. Case B assumes the company has already used its whole AIA on other plant in the same period.

Line	Case A: AIA available	Case B: AIA already used
Allowance claimed in the period of purchase	£120,000 (AIA at 100%)	£60,000 (50% first-year allowance)
Taxable profits after the claim	£280,000	£340,000
Corporation tax without the system	£100,000 (25% of £400,000)	£100,000 (25% of £400,000)
Corporation tax with the claim	£70,000 (25% of £280,000)	£85,000 (25% of £340,000)
Tax saved in the period of purchase	£30,000	£15,000
Left to relieve later	Nil	£60,000, added to the special rate pool in the next period
Writing-down allowance in the next period	Nil	£3,600 (6% of £60,000), saving £900 if the 25% rate still applies

Two things stand out. The AIA saves £30,000 of tax in the period of purchase against £15,000 from the 50% allowance, and in Case B the remaining £60,000 is relieved at only 6% a year, so where a company's spending exceeds £1 million in a period, the way its AIA is used matters. GOV.UK confirms that if an item qualifies for more than one capital allowance you can choose which one to use; the capital allowances guide covers that choice. And relief only has value against taxable profits. Take a second, smaller company, again with no associated companies and a 12-month period, with taxable profits of £40,000 and a £30,000 system covered by the AIA. Its profits are £50,000 or less with or without the claim, so it pays the 19% small profits rate: £7,600 without the claim and £1,900 on the £10,000 left after it, a saving of £5,700, which is 19% of £30,000. Where profits fall between £50,000 and £250,000, marginal relief applies and the saving has to be worked out under those rules. And where profits are too low to use the allowance at all, GOV.UK notes that you can claim writing-down allowances instead of the AIA, or part AIA and part writing-down allowances, so ask your accountant which order of claims makes best use of the relief.

Depreciation is not relief

Accounts and tax treat the same system differently. In the accounts, a purchased system is recorded as property, plant and equipment, and FRS 102 requires its depreciable amount to be allocated on a systematic basis over its useful life, which is the business's own estimate. For tax, that depreciation is added back: HMRC's policy paper says capital allowances take the place of commercial depreciation, which is not allowed for tax. The two rarely match. A system relieved in full by the AIA in the year of purchase may be depreciated over many years in the accounts, and the gap between them is what deferred tax accounting deals with. The guide to solar panel depreciation explains the accounting under FRS 102, including component lives, residual values and impairment, and why the depreciation charge does not set the tax bill.

Before you rely on any of this

This guide is general information about UK tax rules as they stand on 14 October 2026, not tax advice. The reliefs depend on facts no web page can see: how the business is structured, what else it buys in the period, who owns the building and the panels, and how any finance agreement is written. Check your own position with an accountant or with HMRC before you sign a contract or make a claim. If you are still choosing how to pay for a system, the finance options hub and the finance calculator show how the routes compare.