WHAT SOLAR PANEL GRANTS, FUNDING & TAX BENEFITS ARE AVAILABLE?

Purchasing a solar system has never been more affordable, thanks to steadily declining upfront costs that have seen the price of solar panel equipment drop by as much as 82% over the last decade.

Accompanying these lower costs are ever more significant incentives and tax breaks afforded by the UK government to entice more over to the green side.

The combination of these short-term savings from solar power tax breaks and the long-term benefits of using solar energy means there has never been a better time to go solar.

Purchasing a solar system has never been more affordable, thanks to steadily declining upfront costs that have seen the price of solar panel equipment drop by as much as 82% over the last decade.

Accompanying these lower costs are ever more significant incentives and tax breaks afforded by the UK government to entice more over to the green side.


The combination of these short-term savings from solar power tax breaks and the long-term benefits of using solar energy means there has never been a better time to go solar.

READ MORE ABOUT THE GREEN DEAL FOR HOME HERE

SOLAR POWER INCENTIVES

Numerous incentives are available to homeowners looking to install solar power systems.  

ECO4 (Energy Company Obligation)

On 1st April 2022, the UK switched from ECO3 to ECO4, which will run until 2026. The Energy Company Obligation has seen the UK government pledge £4 Billion across the next four years to raise the energy ratings of UK homes and reduce carbon emissions. It means that far more people will qualify for solar panel grants than in the past.

ECO4 allows individual local councils to use funds at their discretion, primarily to help low-income or vulnerable households to help reduce their energy bills.

You could be eligible for the ECO4 funding if you receive any of the following benefits:

• Income-based Jobseekers Allowance (JSA)
  
• Income-related Employment & Support Allowance (ESA)
  
• Income Support (IS)
  
• Universal Credit (UC)
  
• Housing Benefit
  
• Working Tax Credit (WTC)
  
• Child Tax Credits (CTC)
  
• Pension Credit Guarantee
  
• Pension Credit Savings Credit
  

The Child Benefit income threshold to qualify for ECO4 varies depending on how many children you have and whether you’re a single or two-parent household.

Single-parent households:

• One child – £19,900
  
• Two children – £24,800
  
• Three children – £29,600
  
• Four or more children – £34,500

Two-parent households:

• One child – £27,500
  
• Two children – £32,300
  
• Three children – £37,200
  
• Four or more children – £42,000
  

Those with additional Department for Work and Pensions (DWP) benefits –regardless of whether you receive Universal Credit – may also be eligible for ECO4.

The ECO4 grant’s focus is primarily on homes occupied by their owners. However, the scheme can also be extended to support energy-inefficient social housing and privately rented properties (so long as the property owner allows). 
 
LA Flex (Local Authority Flexible Eligibility), an extension of the ECO4 scheme, allows local authorities to identify households that may not have met the criteria or been eligible under the national criteria. Through LA Flex local authorities can decide eligibility for energy efficiency improvements – this is usually based on the following:

• The household is defined as low-income and is at risk of fuel poverty.
  
• The property is hard to heat, often due to poor insulation or lack of a central heating system.
  
• The residents are vulnerable in some way, such as being elderly, disabled, or having young children.
  

It should be noted that for private tenants to be eligible for LA Flex, they would need their landlord’s permission.

Those who are eligible under ECO4 or LA Flex could be entitled to up to 100% off their solar panels.

You could also be eligible for funding under the LADS (Local Authority Delivery Scheme).

SMART EXPORT GUARENTEE (SEG)

The SMART EXPORT GUARENTEE (SEG) program began on 1st January 2020, designed to provide funding and support for solar panel installation for homes. It allows consumers generating small-scale electricity to effectively export whatever energy they don’t use back into the national grid and receive payment.

SEG isn’t a government program, but the government has put pressure on energy providers so that all licensed suppliers must now offer an export tariff to their customers. All homes with solar panels and the relevant systems of up to 5 MW capacity are eligible under the scheme.

REDUCED VAT

Another significant benefit around at the moment is the reduction of VAT on solar equipment and installation.

Before April 2022, VAT was set at 5% for energy-efficient measures, but new changes mean homeowners and businesses can receive a huge helping hand.

Estimates put the average UK family saving between £500 and £1,000 on the installation process, yet another excellent incentive to get that solar system now.     

It should be noted that this scheme will last until the 31st of March, 2027.Another significant benefit around at the moment is the reduction of VAT on solar equipment and installation.

Before April 2022, VAT was set at 5% for energy-efficient measures, but new changes mean homeowners and businesses can receive a huge helping hand.

Estimates put the average UK family saving between £500 and £1,000 on the installation process, yet another excellent incentive to get that solar system now.
    
It should be noted that this scheme will last until the 31st of March, 2027.

WHAT ARE THE SOLAR POWER TAX BREAKS?

The installation of solar panels is eligible for special rate pool allowances and would be subject to the £1m annual investment allowance (AIA) which allows 100% relief on eligible assets such as plant and machinery and integral features, including solar panels. There is also a 50% first year allowance for integral features such as solar panels under the new ‘full expensing’ rules. These came in from 1 April 2023 and run until 31 March 2026. The 50% allowance is particularly useful where a company does not have sufficient AIA.

While solar panels are among the eligible assets for the AIA, you should keep in mind that there are certain situations where you can’t claim them. These include:The installation of solar panels is eligible for special rate pool allowances and would be subject to the £1m annual investment allowance (AIA) which allows 100% relief on eligible assets such as plant and machinery and integral features, including solar panels. There is also a 50% first year allowance for integral features such as solar panels under the new ‘full expensing’ rules. These came in from 1 April 2023 and run until 31 March 2026. The 50% allowance is particularly useful where a company does not have sufficient AIA.

While solar panels are among the eligible assets for the AIA, you should keep in mind that there are certain situations where you can’t claim them. These include:

• If you already used the same solar panels for other purposes before starting your business. (for example, transferring the panels from your house to your business).
  
• If the solar panels were given or gifted to your business
  

ARE YOU ELIGABLE FOR SOLAR PANEL TAX BREAKS?

These solar power tax breaks are available to all businesses, big or small, regardless of employee size or physical location size. If you have a business and are legally allowed to place solar equipment within your location, you can take advantage of these excellent incentives. These solar power tax breaks are available to all businesses, big or small, regardless of employee size or physical location size. If you have a business and are legally allowed to place solar equipment within your location, you can take advantage of these excellent incentives.