National tax policy for solar power generation

Should guidance on solar PV be included in the National Policy Statement?

The solar industry very much welcomes the addition of guidance on solar PV to the National Policy Statement for renewable energy infrastructure. However, there are several provisions which could be strengthened, which we have outlined below.

Do solar installations qualify for HMRC tax relief?

HMRC regard solar installations as a long-life asset, which sometimes reduces relief. However, the installations do qualify for 100% Annual Investment Allowance (which is available for up to £1,000,000 of total qualifying expenditure by most standalone farming sole trades, partnerships or companies in the year ending 31 March 2023).

Should a target for solar generation be included in the NPS?

This equates to roughly 40GW of solar by 2030, and the solar industry body, Solar Energy UK, has demonstrated in its 2021 report “Lighting the Way” that this target is possible. We recommend that a target for solar generation should be included in the NPS.

Does government support solar?

It sets out that government is supportive of solar that is “co-located [footnote 80] with other functions (for example, agriculture, onshore wind generation, or storage) to maximise the efficiency of land use”.

Should solar generating stations limit export capacity?

Developers are consistently pushed to limit export capacity from solar generating stations, and the policy statement confirming this is inappropriate is welcomed and essential to support the delivery of net zero by allowing installations to maximise installed capacity and account for improving technology. 2.48.7.

Is a commercial solar installation eligible for capital allowances?

Installations on farm outbuildings (or in fields), which supply electricity to the farm (on its own or in conjunction with the house) or to multiple properties, are commercial. Commercial installations are usually larger than domestic ones. The cost of a commercial solar installation is eligible for capital allowances.