Do Solar Panels Affect Business Rates? The Exemption Explained
For most English businesses, no, and that is a deliberate policy. Eligible plant and machinery used for onsite renewable generation and storage, rooftop solar panels and batteries serving the property's own consumption included, is exempt from business rates until 31 March 2035. The exemption is automatic: the Valuation Office Agency excludes qualifying kit when valuing the property, with no application to make. It removed the perverse situation where improving your building put your rates bill up, and it is one more quiet subsidy stacked behind commercial solar's circa 4 year payback.
In This Guide
The problem the exemption fixed
Business rates are charged on a property's rateable value, and rateable value has historically included qualifying plant and machinery bolted to the building. Under the old treatment, a rooftop solar array could increase a property's rateable value, meaning a business that invested in cutting its energy costs and carbon could be rewarded with a higher rates bill, a genuinely perverse incentive that the industry complained about for years, with some well-publicised cases of steep rateable value increases after installations. The government fixed it: from 1 April 2022, eligible onsite renewable plant and machinery was exempted, and the exemption runs to 31 March 2035.
What the exemption covers
- Rooftop solar for own useArrays like the warehouse pictured, generating primarily for the property's own consumption, the standard commercial install.
- Battery storageStorage used with onsite renewables qualifies too, which matters as commercial batteries spread.
- Other onsite renewablesThe exemption is technology-inclusive across eligible onsite generation kit.
- England, to 31 March 2035The dates and scope here are England's; Scotland and Wales run their own rating systems with their own reliefs, so cross-border portfolios should take advice per nation.
How it works in practice
The pleasant surprise for owners used to government schemes: there is nothing to apply for. The exemption operates through the valuation itself, the Valuation Office Agency simply excludes qualifying plant and machinery when assessing rateable value, so a compliant rooftop array adds nothing to your rates bill by default. Two practical notes from the real world. First, keep the installation documentation with your property records, so that if a valuation query ever arises, demonstrating the kit's qualifying purpose is a five-minute job. Second, if you installed solar before 2022 and suspect your rateable value still reflects it, that is a conversation for your rating adviser, historic valuations are their trade, not your installer's.
The edge cases
- Mainly-export installationsThe exemption is aimed at onsite generation serving the property's own use. Arrays built principally to sell power, closer to being a small power station than a roof improvement, sit differently, and that is rating-adviser territory.
- PPA-funded systemsWhere a funder owns the kit under a power purchase agreement, the rating treatment interacts with the roof lease, one more clause for the lawyers' list in that model.
- After March 2035The exemption has an end date. Policy may extend it, or not, and prudent long-term modelling notes the date without panicking about it; by 2035 a system installed today will long since have paid for itself.
- Tenanted buildingsWho benefits from the exemption follows who pays the rates, which is worth a line in any landlord-tenant solar agreement, as our landlord guide touches on for the domestic side.
Where it sits in the commercial case
The rates exemption is best understood as one layer in a stack that has quietly made commercial solar one of the better capital projects available to a British business: capital allowances shelter the purchase from tax, the rates exemption stops the asset inflating your rates bill, and the generation itself pays back the investment in circa 4 years on well-matched roofs, per the real numbers in our payback guide. None of these layers requires a grant application or a lottery; they are standing features of the tax and rating system that reward the investment automatically. The engineering question, whether your roof and daytime load make the generation numbers work, is the one that actually decides the project, and it is the one a survey answers.
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Get EstimateFrequently asked questions
Do solar panels increase business rates?
In England, not currently: eligible plant and machinery for onsite renewable generation and storage, rooftop solar included, is exempt from business rates until 31 March 2035. The exemption fixed the old perverse treatment where installing solar could raise your rateable value.
Do I need to apply for the solar business rates exemption?
No. It is applied automatically through the valuation: the Valuation Office Agency excludes qualifying green plant and machinery when assessing rateable value. Keep your installation documentation with the property records in case a valuation query ever needs it evidenced.
Does battery storage qualify for the exemption?
Yes, storage used with onsite renewables sits inside the exemption alongside the generation kit, which strengthens the case for commercial battery systems that shift solar into evening operations or exploit cheap-rate charging.
What happens to the exemption after 2035?
The current exemption runs to 31 March 2035, and what follows is a policy decision not yet made. Practically, a system installed now will have repaid its cost several times over by then, so the exemption's end date affects the tail of the return, not the case for the investment.
Does the exemption apply in Scotland and Wales?
Scotland and Wales run their own rating systems with their own relief arrangements, so the England dates and rules here do not simply transfer. Cross-border operators should take nation-specific advice from a rating professional; the England position covers the properties this guide's region serves.
Related reading
- Solar and capital allowances
- Commercial solar payback: real numbers
- Commercial solar finance: the four routes
- Commercial solar battery storage
- Solar panels for warehouses
Commercial solar that stacks every advantage
We are Spectrum Energy Systems, MCS certified (NIC200223), installing commercial solar across the East Midlands, 10+ MW connected, with quotes your advisers can take straight to the numbers. Call 0115 773 7575, 8am to 8pm, Monday to Friday.
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