Why a domestic 0% solar deal doesn't work for a business

Quick answer: Consumer solar finance and commercial asset finance are different products. A household deal is priced for an individual and carries no tax relief; a business that owns its system claims capital allowances, recovers the VAT, and is assessed on its accounts rather than a credit score. A headline 0% consumer rate is not the number to compare against.

Search for solar finance and most results are aimed at households — an energy supplier or installer offering to spread the cost of a domestic installation, frequently at a headline 0%. It is a well-built product. It just has almost nothing to do with funding a system on a commercial roof, and comparing the two directly leads businesses to the wrong conclusion.

Four things change when the borrower is a business

1. You are assessed on the business, not a credit score

Commercial funders underwrite the company. They look at filed accounts, trading history and the balance sheet, and on larger projects at the cash flows the project itself produces. A young company with thin filed history and an established one with the same turnover will be priced very differently, and there is no personal credit check driving it.

That cuts both ways. It means a strong balance sheet earns a finer rate than any consumer product. It also means a business with two years of losses may struggle where a salaried individual would not.

2. Ownership brings tax relief a household cannot claim

This is the big one, and it is the reason a commercial comparison cannot be done on rate alone. Solar PV is special-rate expenditure, so a business that owns the system claims the Annual Investment Allowance at 100% on up to £1m of qualifying spend a year — and, for companies buying new and unused equipment, the 50% first-year allowance above that cap. For a company paying the 25% main rate of corporation tax, that can turn up to a quarter of the cost into tax relief in year one.

A household claims none of this. So a business comparing a 0% consumer-style offer against commercial hire purchase is comparing a product with no tax relief against one with a great deal of it. Which route you use decides whether the relief is yours at all: it stays with you on hire purchase, an equipment loan or a cash purchase, and normally passes to the funder on a lease. Our capital allowances guide sets out the mechanics, and solar panel lease vs buy works the choice through.

3. VAT behaves differently

A VAT-registered business recovers the VAT on the equipment in the normal way, which a household cannot. What changes with the route is the timing: buy outright, on hire purchase or with a loan and the equipment VAT is payable up front and then recovered; lease, and VAT is charged on each rental instead, spreading it across the term. Same broad total, different cash-flow shape — and that shape is often what decides which route a finance director prefers.

4. The consumer protections are mostly absent

A limited company is not an “individual” for Consumer Credit Act purposes, so an agreement with a company falls outside the Act altogether. For a sole trader or small partnership, the business-purposes exemption takes an agreement outside regulation where it is entered into wholly or predominantly for business purposes and the credit exceeds £25,000. A lease or hire agreement has its own equivalent exemption, which turns on the total payments exceeding £25,000 rather than on credit — which matters here, because leases are hire, not credit.

The practical consequence is that your protection is the contract. Early settlement, the rebate calculation, end-of-term options and any termination fees are whatever the document says — which is why we ask for those in writing rather than relying on a statutory formula that will not apply.

So what does “0%” mean in commercial finance?

Rarely what it appears to. A genuine 0% means the funder earns nothing on the money it advances, which is unusual in business asset finance. Where a 0% headline exists, the cost has generally moved somewhere less visible — into the equipment price, a documentation fee, or a residual at the end of the term.

The honest comparator is the total cost of credit: every repayment added together, minus the amount financed. Ask for that figure in pounds, and ask whether a quoted rate is a flat rate on the original balance or an APR on the reducing balance — the same headline number means very different money. You can model the ownership side yourself with the solar finance calculator.

What this means in practice

If you run a business and a domestic-style offer lands in front of you, three questions settle it quickly:

1. Will the business own the system? If not, the allowances and the export income belong to someone else.
2. What is the total cost of credit, in pounds? Not the rate.
3. Can the business use the tax relief this year? If it has no taxable profit, the ownership advantage shrinks and a lease may genuinely win.

Everything else — the 0% headline, the monthly figure, the brand on the paperwork — follows from those. If you want the routes modelled properly against your own numbers, that is what our solar finance work is: cash, hire purchase, lease and a PPA, side by side, net of the allowances your structure can actually use.