Socially conscious investing is becoming a prerequisite and not just a “nice to have” when
    considering a new purchase for a commercial property.

     

    Investors want to do their bit to bring
    about positive change where the environment is concerned, whilst balancing the books. As the
    cost of solar panels fall and energy prices rise there has been an increased uptake of “green“
    systems.

    Let’s shine some light on the tax relief available on Solar Panels

    According to the Building Research Establishment (BRE), there are approximately 250,000
    hectares of south facing commercial (non-domestic) roof space in the UK on which to put solar
    panels. Added to residential and the ground that’s a lot of solar energy.
    Solar or photo voltaic (PV) panels utilise a collection of cells to capture and convert sunlight into
    direct current (DC) electricity. This electricity can be used to power the building or sold on to the
    grid.

     

    The other type of device that is often confused with PV’s is a solar thermal collector which heats
    up hot water.

     

    Water flows through coils in panels exposed to the sun and back into a storage
    cylinder. You will have seen these on the hotels in the Med and other hot countries.
    Investors may be able to claim tax relief on their expenditure, so long as a few boxes are ticked.
    For example, ownership, who spent the money and are they a taxpayer.

     

    The expenditure will typically include the cost of the labour and the panels, cabling, trenches,
    grid connection, professional fees and the site set up such as scaffolding and the management
    of the installation. This expenditure is treated as plant and may qualify for plant and machinery
    allowances (capital allowances). From April 2012 all expenditure on solar panels is designated
    as special rate expenditure, currently attracting an annual writing down allowance of 6% per
    annum.

    A business savvy investor spent £100,000 on solar panels on a warehouse roof in October last
    year.

    The annual capital allowance that they are claiming on this expenditure is £6,000 in the
    first year, giving them a cash saving of approx £1,100. in the same year. They are checking to
    see if they have any of their Annual Investment allowance (AIA’s) left because this could push
    all the savings into one year and save £19,000.
    It is unfortunate that we can’t claim capital allowances on most residential property, but we can
    benefit from greener energy and a reduction in the use of fossil fuels with solar panels.