Business Rates – Current Solutions for Self-Owned Rooftop Solar

This webpage was first published in June 2017. The information herein is still valid and up-to-date.

As of this April (2017) there has been a substantial increases in business rates for organisations with their own rooftop solar, where the majority of the power generated is consumed onsite by the system owner. The STA continues to lobby for fair business rate tax treatment for this important application of solar.

The STA agreed a Memorandum of Understanding with the Valuation Office Agency (VOA), which sets business rates in England and Wales, for ‘mainly exported’ solar where the electricity generated is mainly exported to a third party consumer. This is similar to a ‘landlord and tenant’ arrangement. Providing there is a legal separation, it is perfectly acceptable that the end consumer is themselves. Business rates for mainly exported solar are reasonable and accurately reflect project costs and benefits. You can read details on how the mainly export business rates work in the documents attached.

The VOA has not yet published the new business rates payable by ‘mainly self-consumption’ rooftop solar on their website. Unfortunately microgeneration only has a temporary exemption from business rates in England and Wales, which means that the exemption applies only until the next round of business rate revaluation. Businesses with a rateable value of less than £15,000 qualify for rate relief – see here for details of rate relief.

Microgenerators installed before the latest business rate revaluation who do not qualify for rate relief are unfortunately are now liable for business rates. As are all other owners of self-supply rooftop solar, who do not meet rate relief criteria.

Fortunately it is possible for owners of rooftop solar to qualify for the considerably lower and fairer ‘mainly export’ business rates by changing their legal relationship with their rooftop solar so that, in effect, they ‘mainly export’ their solar power to themselves.

This STA presentation outlines how to set up a ‘Special Purpose Vehicle’ (SPV) as a separate legal entity that takes ownership of your solar panels. You can then quickly and cheaply incorporate the SPV and set up a Power Purchase Agreement to demonstrate that you are ‘exporting’ power to your organisation. Please note the STA does not offer legal advice and this presentation has been made publicly available for guidance only.

Click here for presentation

It may not be an ideal solution, but until we have resolved the difficult situation for solar, this is the best one available.

Members are welcome to contact us for more information, including on business rate treatment in Scotland which adds a further layer of complexity. Unfortunately we do not have the capacity to answer queries from non-members but hope you find this guide helpful. See here for details of STA membership.