HMRC CA22335 explained: why solar panels are special-rate plant and what it does to your claim

CA22335 is the page of HMRC's Capital Allowances Manual that deals with solar panels. It says that, with effect from 1 April 2012 for corporation tax and 6 April 2012 for income tax, “all capital expenditure on the provision of solar panels is specifically designated as special rate”. The statutory hook is CAA 2001 s.104A. Everything about capital allowances on solar panels follows from that sentence.

Why 2012, and why “specifically”

Before April 2012 solar spend was usually special rate anyway, either as an integral feature of a building (CA22300) or as a long-life asset (CA23700), but the classification depended on facts and could be argued. The 2012 designation removed the argument: solar PV and solar thermal are special rate by statute, whatever the building and however long the panels last. HMRC's own manual gives the reason as “clarity of treatment”.

What special rate excludes

Special-rate plant is written down at 6% a year on a reducing balance (the rate fell from 8% in April 2019). Left to that pool, a £200,000 array would take well over a decade to attract half its relief. The designation also puts solar outside every relief Parliament has aimed at main-rate plant: the 130% super-deduction of 2021–23, the 100% full-expensing allowance, and the 40% first-year allowance that applies to main-rate spend from 1 January 2026 following the Autumn Budget 2025. An adviser who claims any of those on solar has misread s.104A.

What special rate leaves you

For the great majority of commercial arrays the AIA relieves the whole cost in year one, so the special-rate label costs nothing. It bites only above £1m of qualifying spend in a period, or where the AIA has already been used on other plant, and the 50% first-year allowance then does most of the work.

How the finance route changes who claims

The designation attaches to the expenditure, not the taxpayer, so whoever incurs it claims it. Buy or borrow and the allowances are yours; lease or sign a PPA and they belong to the lessor or developer, who prices some of their value into the rental or the tariff. That is the single biggest reason a cheap monthly lease can be the expensive route for a tax-paying company — a point our capital allowances guide works through with a £200,000 example.

Three checks before the computation goes in

• The invoice date and the accounting period line up: the AIA is per period, and a commissioning slip across a year end can halve the year-one relief.
• Building works are separated from plant: a new plant room or roof strengthening may be Structures and Buildings Allowance at 3%, not plant.
• The fixtures position on sale is recorded: a section 198 election fixes what the buyer inherits, and solar on a roof is a fixture.

Read next: the Annual Investment Allowance for commercial solar and why the 40% first-year allowance does not apply to solar.