Tax

Year-end tax planning for solar panels: when spend counts for capital allowances

Published 2026-10-28 · 5 minute read · By Commercial Solar Finance editorial team

There is no deadline for the allowances that apply to solar. What the accounting year-end decides is which period the relief lands in, and that is worth planning.

Earlier versions of this page framed a 31 March 2026 cliff. No such cliff exists: the Annual Investment Allowance and the 50% first-year allowance for special-rate assets are permanent (gov.uk). The year-end still matters, for the reasons below.

The rule that matters: the period of the spend

Capital allowances are claimed in the tax return for the accounting period in which the qualifying expenditure is incurred, not when the invoice is paid (capital allowances on solar panels). Your accountant decides when expenditure counts as incurred; it depends on the contract and its payment terms. A project that falls into the next period simply claims in that period.

Why timing still matters

  • The AIA is one limit for all plant. The £1 million Annual Investment Allowance (gov.uk) covers all plant and machinery bought in the period, not just solar. Check the headroom before you order.
  • The relief arrives with the tax for that period. The earlier the period, the earlier the cash benefit.
  • The rate you pay depends on profit. The main rate is 25% above £250,000 and the small profits rate is 19% at £50,000 or less, with marginal relief between (gov.uk). A period with unusually low profit gives the relief less to work on.
  • The finance route decides who claims. A lease or PPA gives the allowances to the funder; see the finance route checker.

A year-end checklist

  • Confirm the AIA headroom for the period with your accountant.
  • Confirm which accounting period the contract and the payments fall in.
  • Confirm the finance route and who owns the array.
  • Keep the contract, invoices and the commissioning certificate for the claim.
  • Claim in the tax return for that period.

For month-by-month planning, use the year-end timing calendar.

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