Will I pay VAT?
The amount of VAT you pay for a solar panel installation will vary depending on the type of business and property you have. Please see our dedicated VAT page for more information.
Funding Methods Explained
Solar panels are a significant but worthwhile investment for any business. With more funding options available, particularly to those in the Agriculture sector, there has never been a better time to take the leap into renewable energy.
As of January 2024, the most popular funding methods are:
- DEFRA Grants
- Loans
- Annual Investment Allowance
- Existing Capital
DEFRA Grants
DEFRA Grants are continuously being released to help support farmers adopt renewable technology. We keep a close eye on the latest grants available, so please get in touch to explore which options are available to you. The grants often cover a percentage of the installation, but you will need the costs and projected energy savings to apply. Getting a quote is therefore the first step in any DEFRA application, as you will find all the necessary information within the quote to apply for the grants.
Annual Investment Allowance (AIA)
You can deduct 100% of the cost of installing solar panels from your pre-tax profits by utilising your Annual Investment Allowance (AIA). This strategic move can result in substantial tax savings. For example, a farming partnership with profits of £500,000 that spends £215,000 on solar panels will only pay tax on £285,000 of their profits. Depending on their marginal rate of tax, this would save them up to £100,000 in tax (£215,000 x 47%) the next financial year.
Loan (No Upfront Capital)
A growing trend among farmers involves utilising a business loan to fund their solar panel installation. Over a five-year term, energy savings from the panels cover both the loan and interest repayments. Please get in touch to see how we made this possible for two Norfolk farmers.
Existing Capital
Opting to pay outright with existing capital continues to be a viable funding method. This approach significantly expedites the installation of your solar panel system, allowing you to start reaping the rewards of free electricity much sooner.
Choosing A Funding Method
We advise all farmers considering solar panels to first obtain a quotation.
From there, your accountant or tax advisor will be able to choose the funding option that best aligns with your unique financial situation. It may also be possible for you to combine funding options, such as the DEFRA grant and your Annual Investment Allowance, making solar panels an increasingly enticing investment and a financially astute choice!
If you have any questions, please contact us and we’ll be happy to help.