Can I get 100% year-one tax relief on solar panels?

Usually, yes — through the Annual Investment Allowance, which gives 100% first-year relief on up to £1 million of qualifying plant per year and covers special-rate assets like solar panels. Beyond the AIA, solar panels attract the 50% special-rate first-year allowance rather than full expensing. Confirm the treatment for your company with your accountant.

Do solar panels qualify for full expensing?

No — HMRC classes solar panels as special-rate plant, which sits outside 100% full expensing. Spend beyond the £1m Annual Investment Allowance instead attracts the 50% special-rate first-year allowance, with the balance written down in later years.

Does tax relief apply if I finance the system?

It depends on the structure — outright purchase and hire purchase are generally treated differently from leases, and a new 40% first-year allowance from January 2026 extends relief to some previously excluded cases, including assets for leasing and unincorporated businesses. Take advice before choosing a funding route; we can model the options.

Tax relief on commercial solar and batteries: capital allowances in 2026

For a profitable UK business, the tax treatment of a solar or battery investment materially changes the year-one numbers. The framework is capital allowances — and after the Autumn Budget 2025 changes, it’s worth being precise about which allowance does what in 2026.

The Annual Investment Allowance does most of the work

The AIA gives 100% first-year relief on up to £1 million of qualifying plant and machinery per year — and it covers special-rate assets, which is the category HMRC puts solar panels in. For most commercial solar and battery projects, the AIA alone delivers full year-one relief on the investment. At the 25% main rate of corporation tax, that’s worth up to 25p per £1 of qualifying spend in year-one tax saved.

Above the AIA: the rates split

For spend beyond the £1 million AIA in a year, the treatment depends on the asset’s classification:

Full expensing — retained at Autumn Budget 2025 — gives companies a 100% first-year deduction on qualifying main-rate plant, uncapped.
Solar panels are special-rate plant under HMRC guidance, so above the AIA they attract the 50% first-year allowance instead, with the remainder written down at 6% a year in the special-rate pool.
The classification of the other project equipment (batteries, inverters, mounting, electrical works) varies with the installation — which is why the equipment breakdown in the proposal matters to your accountant.

What changed at Autumn Budget 2025

Two changes are worth knowing. From 1 January 2026 a new 40% first-year allowance applies to main-rate plant and extends to cases previously excluded from first-year allowances — including unincorporated businesses and assets bought for leasing (overseas leasing excepted). And from April 2026 the main-pool writing-down rate falls from 18% to 14%, which makes first-year allowances relatively more valuable than waiting.

Why it matters to the investment case

Payback on Novalux solar and battery systems is typically 2–4 years on the energy economics alone. Year-one allowances pull real cash forward, shortening the period your capital is genuinely exposed — often the number a finance director actually cares about. The completed projects behind those figures are published, each with its case study.

The caveats

Rates and rules differ between companies and unincorporated businesses, and change at fiscal events — check gov.uk and confirm with your accountant before committing.
How you fund the system (purchase, hire purchase, lease, PPA) changes the treatment — we can model the routes side by side.

In your proposal

Every Novalux proposal itemises the system so your accountant can apply the allowances correctly, alongside 25-year cashflow and payback. Request a Quick Quote to see the full picture for your site.