Invest in Solar, Save on Tax

Tax Relief Opportunity: 100% Deduction on your Solar Investment

The Annual Investment Allowance (AIA)

In addition to helping create a more sustainable future, installing solar panels entitles you to the Annual Investment Allowance (AIA), which lets you deduct up to 100% of the installation cost from your earnings before paying taxes.

What is AIA?

The Annual Investment Allowance is a tax relief that offers a substantial benefit for businesses investing in assets like solar installations. With an AIA amount of £1 million, sole traders, partnerships and limited companies can significantly reduce their tax liability.

Adjustments for Accounting Periods

It’s important to note that if your accounting period is more or less than 12 months, you’ll need to adjust your AIA accordingly. For instance, if your accounting period is 9 months, the AIA would be 9/12 x £1,000,000 = £750,000.

Claiming AIA

AIA is only valid for the time frame in which you purchased the solar installation. The date you signed the contract or the due date for payment is the basis for the claim. When you start using the solar panels, you can claim the payments you haven’t yet made if you bought them under a hire-purchase agreement.

How to Claim

Simply include your AIA claim on your tax return. It’s a hassle-free process to maximise your tax benefits while contributing to a cleaner, greener environment.

Considerations and Options

Partial Claim

If you don’t want to claim the full cost, you have the option to use writing down allowances instead or claim part of the cost as AIA and part as writing down allowances.

Used Outside of Business

The capital allowances are reduced accordingly if you use the solar panels partially for personal use or outside of your businesses standard operations.

Exceeding AIA Amount

If your expenses exceed the AIA amount, claim writing down allowances on the surplus. For a single item surpassing the AIA, you can split the value between types of allowances.

Mixed Partnerships

AIA is only available for partnerships where all members are individuals.

More Than One Business or Trade

Sole traders or partnerships with multiple businesses usually get an AIA for each. Limited companies under the same control can choose how to share one AIA.