Can a business claim tax relief on solar panels?
In most cases, yes. Solar PV is generally treated as plant and machinery in the special rate pool, so a UK company buying outright can usually claim Full Expensing or use the Annual Investment Allowance, with the 50% First-Year Allowance as the alternative route. Hire purchase normally still qualifies; an operating lease or PPA does not, because you do not own the asset.
Last updated 18 September 2026.
Key facts at a glance
| Asset classification | Plant and machinery, special rate pool |
|---|---|
| Main routes | Full Expensing, AIA, or 50% First-Year Allowance |
| Outright purchase | Normally qualifies in the year of spend |
| Hire purchase | Usually qualifies once brought into use |
| Operating lease / PPA | Funder claims, not you |
| Business rates | Rooftop solar for own use is exempt |
What relief actually does to the numbers
Relief reduces taxable profit, not the invoice. The cash benefit depends on your corporation tax rate and on having profits to set it against in the relevant accounting period, so the timing matters as much as the headline percentage. Unincorporated businesses and partnerships follow different rules from companies.
Where projects get this wrong
Two mistakes recur: assuming a lease or PPA carries the same relief as a purchase, and comparing funding quotes where one includes the tax effect and another does not. Compare options on the same basis, and have your accountant confirm the treatment in writing before it goes into a board paper.
Related reading
FAQ
Is solar covered by Full Expensing?
Full Expensing has applied to qualifying special rate expenditure since April 2023, which is how most company-owned solar is claimed. Confirm the current position and your own eligibility with your accountant.
Can a charity or public body claim it?
Organisations outside the corporation tax net generally cannot use capital allowances, so the funding comparison usually turns on grants, reserves or a PPA instead.
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