FYA deadline mechanics: year-end planning for the 31 March 2026 cliff

The FYA expires for qualifying capital expenditure incurred after 31 March 2026. That sentence sounds simple but compresses a surprising amount of nuance — what counts as "incurred", what evidence HMRC expects, and the practical implications for ordering windows on solar projects with multi-month lead times.

When is expenditure "incurred"?

For capital allowances purposes, expenditure is generally treated as "incurred" on the date there is an unconditional obligation to pay. That is typically the date the asset is brought into use — not the date of order, not the date of payment, not the date of delivery. For a commercial solar project, "brought into use" generally means commissioned and producing electricity (with G99 commissioning evidence and meter records).

There are exceptions where the contract structures pre-payments differently — long-stop dates, milestone payments, work-in-progress provisions all interact with HMRC interpretations of when expenditure is incurred. The general principle: don't assume an order placed before the deadline gives you FYA capture. The system needs to be commissioned by the deadline (or specifically by your year-end if it falls after 31 March 2026 but you're trying to capture FYA in the relevant accounting period).

Lead times for typical commercial solar projects

The lead times that matter for FYA capture:

• Discovery and design: 4–8 weeks (site survey, structural review, demand modelling, financial structuring). Add 4 weeks for finance package execution.
• DNO process: 6–24 weeks depending on system size. Above 200 kWp triggers G99 connection studies; above 500 kWp often triggers reinforcement studies adding further weeks. Don't assume DNO work runs in parallel — it can and does become the binding constraint.
• Procurement: 8–14 weeks for modules and inverters from order to delivery. Tier-1 module suppliers are typically 10 weeks; central inverter manufacturers can run 14 weeks.
• Construction: 1–6 weeks depending on system size and access complexity. Larger projects sequence across multiple roof sections.
• Commissioning: 1–4 weeks. G99 commissioning requires DNO inspection slot — these can take 2–6 weeks to schedule on busy DNO patches.

Total: 20–48 weeks from contract execution to commissioning. For year-ends in the December 2025–March 2026 window, working backwards: orders placed by July 2025 are safe; orders placed in October 2025 are tight on anything but the smallest projects; orders placed in January 2026 are likely too late on systems above 200 kWp.

What changes if you miss the deadline

If commissioning falls after 31 March 2026 (assuming no Budget extension), the FYA is unavailable on the qualifying expenditure. The capital allowance position becomes:

• 100% of qualifying expenditure goes into the special-rate pool (vs 50% under FYA).
• Special-rate pool gives 6% writing-down allowance per year on a reducing-balance basis.
• Net present value of the lost FYA: approximately 8–10% of capex at typical discount rates and the 25% main rate.

On a £200,000 system that's £16,000–£20,000 of present-value tax saving lost. Material but not project-killing. Most commercial solar projects with strong fundamentals still produce 12–15% IRR even without FYA — but the post-FYA window IRR runs 14–17%, a 2–3 percentage point premium that materially shifts marginal projects.

AIA as an alternative

The Annual Investment Allowance (AIA) provides an alternative route to year-one tax relief: 100% deduction on the first £1m of qualifying capital expenditure per accounting period. Where AIA headroom is available, claiming AIA gives stronger year-one cash than the FYA + special-rate pool route. For projects under £1m where AIA is available, the FYA is largely redundant.

The catch: AIA is shared across all qualifying capital spend in the period — vehicles, plant, machinery, fit-out. If your business is doing other capital investment, AIA headroom may already be partly committed. Confirm with your accountant before assuming AIA capture.

Practical recommendation for affected year-ends

If your accounting year ends between January 2026 and March 2026 (so 2025 calendar Q4 is "the year"), and you're considering commercial solar, the practical guidance:

• Order placed before April 2025: safely on track for end-of-March 2026 commissioning on most project sizes.
• Order placed June–July 2025: achievable for 100–500 kWp projects with conservative DNO assumptions.
• Order placed October 2025: tight on anything above 250 kWp; only attempt if DNO position is already resolved.
• Order placed January 2026: realistically only suits very small projects (under 50 kWp) with simple installations.

For Q4 2025 enquiries on larger projects, we typically recommend modelling both the FYA-capture scenario and the post-deadline scenario. If the post-deadline IRR is still above your hurdle rate, the project doesn't depend on FYA timing. If it doesn't, deferring to align with a later year-end and re-evaluating is the cleaner answer.