Capital Allowances for Solar: AIA, Not Full Expensing
Full Expensing is not a grant, and it does not apply to solar panels or batteries. The relief that does apply is the Annual Investment Allowance — worth up to 25p back per £1 for a company paying 25% corporation tax.
Why Full Expensing doesn't cover solar
Full Expensing gives companies a 100% first-year deduction on new main-rate plant and machinery. HMRC classes solar panels and battery storage as special-rate expenditure (Capital Allowances Act 2001, s.104A), so they fall outside it. The Annual Investment Allowance gives the same 100% year-one deduction on up to £1m of spend a year, which covers almost every commercial solar project.
Who can claim AIA
- Limited companies, sole traders and most partnerships with taxable profits
- You need to own the system: under a PPA or an operating lease the funder claims the allowances
- Hire purchase usually still lets you claim — check the agreement with your accountant
- Charities, schools and NHS bodies don't pay corporation tax, so the relief doesn't help them
What qualifies
- Solar panels, inverters and battery storage
- Mounting systems, DC and AC cabling, isolators and monitoring equipment
- Installation labour and the associated electrical works
How the relief works
No application form — the relief is claimed through your tax return.
Buy the system
The allowance goes to whoever owns it, so capex or hire purchase — not a PPA or an operating lease.
Keep the invoices
Ask for an invoice that lists the panels, inverters, batteries and installation.
Claim AIA
Your accountant claims the allowance on the tax return for the period the spend falls in.
Relief realised
At 25% corporation tax, up to 25% of the qualifying spend comes back as lower tax.
How KMM helps
Every commercial proposal we send models the Annual Investment Allowance into the year-one cash position, and our invoices list each qualifying component for your accountant. We don't replace tax advice, but we make the claim straightforward.
Real KMM commercial installs
Every case study below is a real KMM customer with measured Year 1 generation, real payback maths and named project manager.
Doctors' Surgery Solar Rescue: 100kW + Battery Backup
A Market Deeping doctors' surgery had been let down by a previous solar installer — non-stop issues, no monitoring, zero confidence. KMM installed 100kW solar, 100kW battery, Tigo optimisers on every panel.
UK Farm Solar Case Study: 3-Year Payback
UK farm sized its solar at 50,000 kWh against 37,000 kWh usage to future-proof. KMM modelled a 3-year 3-month payback and roughly £500k of 30-year savings.
UK Farm Solar: Cutting Energy Costs on a Dryer
UK farm with grid-only power and a summer grain dryer turned to solar to harness rising energy costs, drive its dryer, and earn export income.
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