Commercial solar finance options: which route fits your project?

The five routes and who each one fits

The routes differ on three things that decide the real cost: who owns the array, who claims the capital allowances, and how much cash leaves the business in year one. The table sets them side by side; each row links to the full route page.

The difference between the first three rows and the last two is ownership: the first three leave the array and the allowances with you, the last two leave them with the funder, who prices some of their value into the rental or the tariff. That is why the tax question comes before the interest-rate question.

Why your tax position decides more than the interest rate

Capital allowances reduce taxable profit, so they only help a business that has profit to reduce. The Annual Investment Allowance is £1 million (gov.uk), and for most commercial solar systems it gives 100% relief in the first year on the installed cost. Solar PV is a special-rate asset for the pool rules (HMRC CA22335), which matters only above the £1 million cap, where the 50% first-year allowance applies. The page on capital allowances on solar panels works through the claims.

What the relief is worth depends on the rate you pay. The main rate of corporation tax is 25% for profits above £250,000, the small profits rate is 19% for profits of £50,000 or less, and companies in between may get marginal relief (gov.uk). A business paying the small profits rate gets less from the same allowance than one paying the main rate, and a loss-making business, a charity or a public body gets nothing from it. For those buyers a lease or a PPA, where the funder claims the allowances, can be cheaper than owning.

A worked illustration (modelled, not a client engagement): a company paying the main rate that buys a £200,000 array outright sets £200,000 against its profit in year one, which at 25% is up to £50,000 less corporation tax, provided it has the profit to absorb it. The same company on a PPA pays nothing up front, but the developer takes that relief and prices part of it into the tariff.

Who controls the building

Every route needs the right to put an array on the roof for the length of the contract, and that is the second question the checker asks. Owners and long leaseholders can choose any route. A tenant with a short or uncertain lease has to settle the landlord's consent and the lease term before comparing monthly payments, because a funder is lending against a saving that has to outlast the finance (see what lenders check before they say yes). A landlord who lets the building to tenants has a different question: who pays the electricity bill and who gets the saving, which is covered in the landlord and tenant split.

Business finance is not household finance

Searches for solar loans mostly come from householders, and the products are different. Under article 60C of the Regulated Activities Order, a credit agreement above £25,000 taken out wholly or predominantly for business purposes is exempt from the consumer-credit regime (legislation.gov.uk); a sole trader or small partnership borrowing less than that can still be a regulated customer. A limited company, a charity or a public body buying a commercial array is dealing in business finance, with business credit assessment. This site covers that market only. Business green loans and the lender comparison are written for it.

How the checker ranks the routes

Each route starts at zero. The checker adds or removes points for six things, and the total decides the order. The rules are editorial and fixed; they are not tuned to send you to any lender or installer, and there is no lender or installer on the other end.

• How you want to pay. Cash and borrow-to-own answers favour the ownership routes; a fixed monthly payment favours leasing; no up-front cost favours a PPA.
• Corporation tax. A taxpayer gains from owning, because the allowances are worth claiming; a business with no tax to relieve gains from a lease or PPA, where the funder claims them.
• Who is buying. Charities and public bodies lean to leases and PPAs; a sole trader leans to a simple loan.
• The building. A short or uncertain lease marks every route down and adds a warning about consent and term; owning the building favours buying.
• Budget. Small projects lean to cash or a loan; projects above £500,000 give leases, hire purchase and PPAs more weight.
• Timeline. Used only to score the enquiry, not to rank the routes.

The ranking is a starting point for a conversation with a funder, not a substitute for one. Two near-tied routes are both worth pricing, which is why the checker shows the top three with their trade-offs and links to the full route pages.

What happens to your answers

Nothing leaves your browser until you press send. If you do, the answers, the shortlist and the contact details you give are emailed to us, and we reply by email. We do not pass your details to installers or lenders without your permission; the privacy notice sets out how they are handled. The checker does not perform a credit search.

Claims table: every figure on this page and its source

Every number and proper noun above is listed here with where it comes from and the date it was checked. If a row is not here, the figure should not be on the page.