CAPEX PURCHASE
Get in touchInvest your own capital to secure your energy future
Our most popular method of financing the installation of Solar PV systems is whereby our clients agree a staged payment of the installation utilising their own capital. These payments originate from the signed contract stage and are spread the cost over the installation stages, culminating in a final payment upon commissioning of the system. We then hand over the system to you to own outright from day one.
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Tax relief is achievable for the vast majority of clients, but this is a specialist area and is best discussed with your accounts department or tax advisor. Please see ‘Capital Allowances’ below.
Contact usThe UK Government encourages commercial enterprises to invest in renewable energy through tax incentives, primarily capital allowances. These incentives mean that as well as a significant reduction in electricity spend, businesses pay reduced taxes by claiming back the cost of installing qualifying assets.
There are various types of capital allowances for plant and machinery, Solar PV being classified in this area.
- Annual investment allowance
- Most plant and machinery can claim AIA up to £1,000,000 in any given tax year.
- 100% first year allowances
- Electric cars and electric vehicle charging points qualify under this tax relief.
- 50% first year allowance
- Solar PV qualifies under this tax relief.
- The 50% First Year Allowance was due to end on 31st March 2023, however the 2023 Spring Budget extended the allowance for a further three years until 31st March 2026.
- Writing down allowances
- ‘Writing down allowances’ are one type of capital allowance. They let you deduct a percentage of the value of certain items from your profits each year. You might be able to claim more tax relief if you can use one of the other capital allowances.
Please consult with your accountants or other tax experts within your business for the most tax efficient way to manage your assets.
The easiest and cheapest way to fund your renewable energy solution is with cash. From the outset, you will have full ownership of the solar asset, avoiding additional costs through interest accumulated via loans and allowing you to capitalise straightaway on your investment.
Supplementary benefits are available for businesses that opt to pay upfront for their solar PV system, such as, taking advantage of The Annual Investment Allowance (AIA). The AIA allows you to deduct the full value of an item that qualifies for an annual investment allowance from your profits before tax is applied. This is currently capped at £1 million per tax year.
For example, if a business were to invest ready cash into a solar project with a value of £300,000, the potential tax reduction could mean a saving of up to £60,000, providing the business had profits to offset and they are a taxpayer at a rate of 20%.
