Solar finance for farms

We arrange the funding and nothing else — we are not an installer. What follows is the finance and tax side of a farm solar project, with the points that are specific to agriculture rather than commercial property in general.

Your business structure decides which allowances you get

This is not a technicality for a handful of farms, and two separate government counts point the same way. The Office for National Statistics' UK Business figures for 2026, which count VAT- or PAYE-registered enterprises in agriculture, put about 84% of UK farm businesses outside company status — roughly 80% in England — split between partnerships (around 46%) and sole traders (around 37%). Defra's Farm Structure Survey counts agricultural holdings rather than registered businesses, and found 97% run by a ‘sole holder’ against 3% by limited companies or institutions; Defra restated that 3% in its 2025 Farming Profitability Review. Those two surveys count different populations, so the percentages are not interchangeable — and Defra's ‘sole holder’ category deliberately bundles sole traders and partnerships together, so it cannot be split. But on either basis the companies-only allowance is unavailable to the large majority of the industry, and a finance comparison built around a corporation-tax payer is modelling the wrong business for most farms.

Solar PV is special-rate expenditure in its own right under section 104A(1)(g) of the Capital Allowances Act 2001, confirmed in HMRC's manual at CA22335. It does not qualify for 100% full expensing, which covers main-rate plant only. What you can claim then depends on how the farm trades:

• Annual Investment Allowance — almost everyone. 100% relief on up to £1m of qualifying spend per accounting period, available to sole traders, companies, and partnerships whose members are all individuals. A partnership with a corporate partner falls outside it, which is worth checking where part of the business has been incorporated. For most farm rooftop projects this covers the whole cost.
• 50% first-year allowance — companies only. On spend above the £1m cap, a company within the charge to corporation tax can claim 50% in year one on new and unused equipment, with the balance going into the special-rate pool at 6% a year. A partnership or sole trader cannot, so a large partnership project relies on the AIA plus writing-down allowances.
• Only if you own it. Hire purchase, an equipment loan and cash purchase all keep the claim with the farm. On a lease the funder normally claims instead and prices the benefit into the rentals.

Worth raising with your accountant before the year end: if the partnership is considering incorporation, the timing of a large solar purchase relative to that change affects which allowances are available. Our capital allowances guide covers the mechanics.

Grants: check what is open, then check the tax

Farm grant rounds for on-farm energy come and go, and they are administered separately from the general business support schemes, so the practical step is to search what is genuinely open rather than plan around a scheme name you have seen quoted. The government's Find a grant service is one place to search, though it is still in beta and does not list everything; for England, Defra's funding for farmers, growers and land managers is the maintained list.

Then apply the rule that catches people out. Under the Capital Allowances Act 2001, expenditure met by a contribution from a public body is treated as not incurred by you — so you cannot claim capital allowances on the grant-funded portion, only on the part the farm paid. On a £200,000 project with a hypothetical 25% grant, the £50,000 grant leaves £150,000 qualifying for allowances rather than £200,000. The grant is still worth taking; it is simply worth less after tax than its headline figure. We work through this in does a grant reduce the capital allowances on solar panels?, and our solar grants for business page covers the search itself.

One more condition to read before signing anything: grant offer letters commonly restrict selling or changing the ownership of the funded equipment for a period, which can rule out a later refinance or sale-and-leaseback.

The grid connection usually sets the timetable

Farm arrays are often larger than the rooftop systems a general finance page assumes, and the connection route follows the size. A small installation is notified to the distribution network operator under the G98 process, which covers up to 16 A per phase — around 3.68 kW on a single phase. Anything above that, which includes most farm-scale systems, goes through G99, where you apply for a connection offer before energising.

This matters for finance because the connection offer, not the installer's lead time, is frequently the long pole. We release funds on commissioning, so a slow connection does not start your repayments early — but it does move the date the savings begin, which is the figure the project is judged on.

Export income and self-consumption

Farms are unusual in how much of their own generation they use. A dairy with refrigeration and vacuum pumps, or a unit with grain drying and ventilation, may consume most of what the roof produces during daylight — and self-consumed electricity is worth the unit rate you avoid paying, which is normally well above any export rate (though it does not save your standing or capacity charges). Whatever is exported is paid for under an export tariff. Exported units are paid for under an export tariff, and the rate is set by the supplier, not by Ofgem. The spread is wide — one supplier's open Smart Export Guarantee rate was 4.1p/kWh while its commercial tariff was 12p/kWh in September 2026, and that commercial tariff caps below 150 kWp and requires an import contract with the same supplier — so get the rate you will actually be paid in writing before you model it.

The practical consequence: the higher your daytime self-consumption, the better the project looks, and the less the export rate matters. Bring a year of half-hourly data if you have it — it changes the sizing.

Structuring around farm cash flow

Seasonality is the reason farm finance differs in practice. Arable receipts arrive after harvest; livestock and dairy income is steadier but tighter. The structures we see work:

• Hire purchase — ownership and the allowances from day one, with the payment profile shaped to your receipts rather than flat monthly instalments where a funder will agree it.
• Equipment loan — ownership without a charge over the panels in many cases, which suits a farm that already has security committed elsewhere.
• Finance lease — lower rentals where the allowances are of no use to the business, for example after a loss-making year.
• Refinance or sale-and-leaseback — for a farm that already paid cash for an array and now wants that capital back for a building, a robot or land.

If the farm trades as a company, note that under the revised FRS 102 most leases sit on the balance sheet for accounting periods beginning on or after 1 January 2026, so a lease no longer keeps the commitment out of the accounts.

What we need to model it

1. Your installer's quote, with the system size and whether it is roof or ground-mounted.
2. Twelve months of electricity bills, or half-hourly data if the site is metered that way.
3. Your latest accounts, and confirmation of whether the business is a sole trade, partnership or company.
4. Any grant offer letter, or the scheme you are applying to.
5. The G98 or G99 position, if the connection application has started.

With those we model cash, hire purchase, lease and a PPA side by side, net of the allowances your structure can actually use, and show the total cost of credit in writing.