Solar panel finance for UK businesses
How to put commercial solar panels on finance in 2026: the routes, what the repayments look like, how the tax works and what to check before you sign.
What "solar panel finance" means for a business
Solar panel finance means paying for a system over time instead of in one outlay. For UK businesses there are five practical routes, and they differ in who owns the system, who claims the tax relief and how the debt appears in your accounts. We are not a lender and not an installer; the comparison below is about the structure of the money.
- Hire purchase: you own the system once the final payment is made, and you claim the capital allowances, usually on the full cost, from the first year.
- Green equipment loan: you own the system from day one, and the loan is often not secured against the panels themselves.
- Finance lease: the lessor owns the system and usually passes the allowance benefit back in lower rentals; VAT is spread across the rentals.
- Operating lease: usually the lowest monthly payment; rentals are deductible for tax, and you hand back, extend or buy the system at the end.
- Cash purchase: the benchmark for lowest lifetime cost, with full allowances and no interest.
There is also refinance and sale-and-leaseback for releasing cash from a system you already own. Compare the lot on our finance options page.
The routes compared
| Route | Who owns it | Capital allowances | VAT | Balance sheet | Best for |
|---|---|---|---|---|---|
| Hire purchase | You, after the final payment | You claim | On the full price up front, then reclaimed if you are VAT-registered | Asset and debt | Owning the system and using the tax relief |
| Equipment loan | You, from day one | You claim | Up front, then reclaimed | Asset and loan | Ownership with less security over the panels |
| Finance lease | The lessor | Usually the lessor, priced into rentals | Spread across the rentals | Right-of-use asset and liability for most companies from 2026 | Spreading VAT and the monthly cost |
| Operating lease | The lessor | The lessor; your rentals are deductible | Spread across the rentals | As finance lease for most companies from 2026 | The lowest payment where ownership is not the goal |
| Cash purchase | You | You claim | Up front, then reclaimed | Asset only, no debt | Lowest lifetime cost where cash allows |
Balance-sheet treatment follows the revised FRS 102 for accounting periods beginning on or after 1 January 2026; micro-entities reporting under FRS 105 are unaffected. A finance lease can be a "long funding lease" for tax, in which case the lessee claims the allowances; our guide to FRS 102 lease changes for solar explains the accounting side.
What solar panel finance costs: a worked example
Take a business installing a 165 kW rooftop system for about £160,000. At an illustrative 8.5% APR, with equal monthly payments and no deposit, fees or balloon, the repayment depends on the term:
| Term | Monthly payment | Total repaid | Cost of credit |
|---|---|---|---|
| 5 years | £3,258 | £195,508 | £35,508 |
| 6 years | £2,820 | £203,030 | £43,030 |
| 7 years | £2,509 | £210,725 | £50,725 |
| 10 years | £1,957 | £234,838 | £74,838 |
The rate is an assumption for illustration, not a quote: what you are offered depends on your covenant, the term, the security and the deal size, as explained in solar finance rates explained. Set the six-year payment against a system of that size on a high self-consumption site, which might save and earn roughly £3,300 a month, and the project is cash-flow positive by around £480 a month before tax. On top, a company paying the 25% main rate of corporation tax can claim up to £40,000 of Annual Investment Allowance relief in the first year. Both halves move with your actual rate and your actual consumption pattern, which is why it is worth modelling rather than relying on a rule of thumb. Put your own numbers into the finance calculator, or see the full solar finance repayment table and how to turn it into a cost per kWh.
How the tax works
Solar panels are special-rate expenditure for capital allowances. The Annual Investment Allowance (AIA) gives 100% relief in the first year on up to £1m of qualifying spend a year, a limit that is now permanent, and it is open to companies, sole traders and partnerships. Companies can claim a 50% first-year allowance on special-rate spend above the AIA, and the balance is written down at 6% a year. Solar does not qualify for full expensing, which is limited to main-rate assets, and the 40% main-rate first-year allowance does not apply to it either. In practice there is no 100% route above the £1m cap for solar.
Only the owner claims. Finance the system through hire purchase, a loan or cash and the relief is yours; sign a PPA and the funder keeps it; under a finance lease the lessor usually claims it and may reflect the benefit in lower rentals. A finance lease with a term of more than seven years is generally a long funding lease, and a sale and finance leaseback is always treated as one, so the lessee claims the allowances instead. For a profitable company that relief can be worth up to a quarter of the system cost, so it is rarely something to give away without pricing it. A grant, where one is open, reduces the amount you finance and also the allowances you can claim: our guide to grants and capital allowances shows how, and the business grants guide covers what is available.
Government-backed finance: the Growth Guarantee Scheme
The British Business Bank’s Growth Guarantee Scheme gives accredited lenders a 70% government-backed guarantee on eligible facilities, including term loans and asset finance. It is not a grant, and it does not reduce what you owe: the borrower always stays 100% liable. Facilities are generally up to £2m per business group, asset finance can start at £1,000, and under the current terms term loans and asset finance run from three months to six years. You apply through an accredited lender, which sets its own pricing and decides whether to approve. Our Growth Guarantee Scheme guide for solar sets out the published limits, the personal guarantee and security rules, and the changes announced in July 2026.
Which route suits which situation
- A profitable company with tax capacity: hire purchase or an equipment loan, because you own the system and claim the allowances yourself.
- A company that cannot use the allowances yet: ask for a lease quote as well. A funder that can use the allowance may price it into lower rentals, but compare the total cost against owning.
- A newer or thinner-covenant business: an equipment loan, or a facility backed by the Growth Guarantee Scheme, may be easier to place; expect security or a guarantee. See solar finance for a new or weak-covenant business.
- A business that already owns a system: refinance or sale-and-leaseback can release capital, but the tax treatment needs care; read the refinance and sale-and-leaseback page first.
- A farm: see solar finance for farms. A public-sector body should read public-sector solar finance and Salix.
- No capital and no wish to own: a PPA is the alternative; our asset finance vs PPA comparison sets out the trade-offs.
Who can get solar panel finance, and what lenders look at
For a limited company, lenders assess your filed accounts, your trading history and your balance sheet rather than a personal credit score, and stronger covenants get finer rates. Sole traders and partnerships may also have personal credit considered. Beyond the credit decision, expect questions about the installer’s quote, the roof or land the system sits on, and how you will use the electricity. Our guide to what lenders look for in a solar finance application lists the documents to have ready, and a short guide to who finances commercial solar in the UK explains the different kinds of funder and how to check each one.
Most company-to-company lending is unregulated. An agreement taken out wholly or predominantly for business purposes is generally outside Consumer Credit Act regulation where the credit exceeds £25,000 (it must exceed it, so exactly £25,000 is not exempt); below that, a sole trader or small partnership may be inside the regime, and the lender must then be authorised. Our post on why domestic solar finance does not fit a business sets out the detail.
How to get solar panel finance, step by step
- Get a quote from an installer, and size the system from your bills or half-hourly data.
- Model each route against paying cash, net of the capital allowances, and ask your accountant to confirm the tax position for the route you prefer.
- Ask more than one funder for indicative terms in writing, including the total cost of credit.
- Complete the credit assessment: filed accounts, recent management figures and the installer’s quote are the usual starting point.
- Read the agreement before you sign, in particular the security, any guarantee and the early-settlement terms.
- Install and commission. Funders normally release payment on commissioning, so check the drawdown trigger in the agreement.
- Repayments run for the term; at the end you own the system, or hand it back, extend or buy it, depending on the route.
Checks before you sign
- Who the funder is. Check it on the Financial Services Register, and check any claimed Finance & Leasing Association membership on the FLA’s own member list.
- The total cost of credit in pounds, not only the monthly figure or the headline rate. A flat rate is not an APR.
- Security and guarantees. What the funder takes a charge over, whether a director’s guarantee is required, and whether it is capped.
- Early settlement. How the settlement figure is calculated and whether a fee applies.
- Ownership and the end of the term. When title passes, and what the options and any final fee are.
- VAT. Whether it is charged up front or across the rentals, and when you can reclaim it.
- Insurance, maintenance and monitoring. Who must insure the system, and who carries repairs and the inverter replacement.
- Your building. If you do not own it, the landlord’s consent and the length of your lease against the finance term.
- Who receives the export income. Confirm in the agreement who registers for the Smart Export Guarantee and keeps the payments; under a PPA that is normally the funder.
The "0% finance" question
You will see "0% solar finance" advertised, mostly in the domestic market. In commercial finance a genuine 0% rate is rare: the cost of money is real, and where a headline 0% exists it is usually recovered in the price. The honest way to judge any offer is the total cost of credit, the sum of all repayments minus the amount financed. Ask for that figure in writing, alongside a cash-purchase comparison, so a "0%" claim can be checked rather than taken on faith. Our guide to 0% and no-deposit solar finance goes into the detail.
Alternatives to financing the panels
Paying cash gives the lowest lifetime cost where the cash is available and has no better use; our comparison of finance and cash sets out when each wins. A power purchase agreement needs no capital but the funder owns the system and keeps the allowances and the export income. If you are weighing a lease against buying the system outright, solar panel lease vs buy compares the two for a business.
Figures on this page and where they come from
| Figure | Source |
|---|---|
| AIA: 100% on up to £1m a year, permanent | GOV.UK, Annual Investment Allowance |
| 50% first-year allowance for special-rate assets such as solar panels; full expensing does not apply to solar | GOV.UK, 50% first-year allowance guidance |
| Leases on the lessee’s balance sheet from periods beginning on or after 1 January 2026 | Financial Reporting Council, FRS 102 (periodic review 2024) |
| Growth Guarantee Scheme: 70% guarantee to the lender, up to £2m, asset finance from £1,000, terms up to six years | British Business Bank, Growth Guarantee Scheme, read 14 October 2026 |
| Business-purposes exemption from the Consumer Credit Act where credit exceeds £25,000 | Regulated Activities Order 2001 (legislation.gov.uk) |
| 8.5% APR, repayments and cost of credit in the examples | An assumption for illustration, calculated with the effective monthly rate; not a quote |
Related guides
Solar panel finance FAQs
Is it worth getting solar panels on finance?
For many commercial sites, yes, because a solar system produces a saving every month that can sit above the repayment. Whether it does for you depends on your electricity use, how much of the output you use on site, the rate you are offered and the term. Model it before you commit: compare the monthly repayment with the monthly saving and look at the total cost of credit, not only the headline rate. Our finance calculator and repayment table show the arithmetic.
Can a business get solar panels on finance?
Yes. Commercial solar is funded through hire purchase, finance or operating leases, equipment loans, or refinance of a system you already own. Lenders assess your filed accounts, trading history and balance sheet, so approval depends on your covenant strength and the project rather than on a personal credit score. Each funder sets its own minimum deal size and terms, so ask before you apply.
Is there 0% finance for solar panels?
Genuine 0% finance for commercial solar is rare. Most business lending carries an interest cost, and where a headline 0% offer exists the cost is usually recovered in the price of the system. The honest test is the total cost of credit: the sum of all repayments minus the amount financed. Ask for it in writing, alongside the cash price.
Which bank is best for solar financing?
There is no single best funder, because the right one depends on your accounts, the size of the project and the structure you want. High-street and challenger banks mostly offer term loans, asset-finance lenders offer hire purchase and leases, and some lenders write facilities under the government-backed Growth Guarantee Scheme. Compare more than one written offer, and check each funder on the Financial Services Register before you sign.
Do I keep the tax relief if I finance the panels?
It depends on the route. Under hire purchase, an equipment loan or a cash purchase you own the system, so you claim the capital allowances: the Annual Investment Allowance gives 100% relief on up to £1m of qualifying spend a year, and companies can claim the 50% first-year allowance above that. Under a finance lease the lessor usually claims them and may price the benefit into the rentals; under a PPA the funder keeps them entirely.
What credit checks are involved?
For a limited company, lenders look at your filed accounts, your trading history and your balance sheet. For a sole trader or partnership they may also look at personal credit. Younger or thinner-covenant businesses can often still be funded, sometimes with a personal guarantee or with Growth Guarantee Scheme backing, although the pricing reflects the risk.
Does solar panel finance show on the balance sheet?
Hire purchase and equipment loans put the asset and the debt on your balance sheet. From accounting periods beginning on or after 1 January 2026, the revised FRS 102 also brings most leases onto the lessee’s balance sheet as a right-of-use asset and a lease liability. Micro-entities reporting under FRS 105 are not affected. Tax follows ownership and the lease rules rather than the accounting label.
Can I get solar panel finance with a weak credit history?
Often yes, but on different terms. Business lenders judge the company rather than a personal credit score, so a young or thinly capitalised business is looked at on its trading record, its accounts and the strength of the project. Expect a deposit, tighter security or a director’s guarantee. Our guide to solar finance for a new or weak-covenant business sets out what lenders weigh.