Are you considering installing solar panels on your business premises? As well as the environmental benefits and energy efficiency, solar panels can provide tax benefits too.
There are two main types of allowances applicable for solar panels:
1. Annual Investment Allowance (AIA) offers a 100% tax relief on solar panel costs. Therefore, a business can deduct the full price of solar systems from their taxable profits to lower the tax liability. The AIA currently has no end date unlike some other tax reliefs however does have an annual limit of £1million.One of the conditions however is to ensure the panels are for business use only.
2. First Year Allowance applies to any new solar panels bought between April 2021 and March 2026 allowing 50% first year allowance, meaning that half of the costs of the new solar panels can be used to reduce taxable profits.
Ollie Newburn, our Client Manager, has produced an article delving more into the key points for businesses to consider which you can read on our website.
Solar panel capital allowances can offer big tax savings. If you’re looking to purchase these for your business, speak to the team at Hayward Wright to find out about your tax saving options.