Capital Allowances on Solar Panels and EV Chargers in 2026
Capital allowances treat the two halves of a solar EV charging project differently. New EV chargepoints get a 100% first-year allowance until 31 March 2027 for companies. Solar panels are special-rate plant: relieved in full through the Annual Investment Allowance up to £1m a year, then at 50% in year one for companies — they do not qualify for full expensing. This page sets out each relief, the order to claim them and the traps.
The reliefs side by side
| EV chargepoints | Solar PV panels | |
|---|---|---|
| Main relief | 100% first-year allowance (Capital Allowances Act 2001, s45EA) | Annual Investment Allowance: 100% on up to £1m of plant a year |
| Condition | Plant or machinery for a chargepoint, unused and not second-hand, installed solely to charge electric vehicles | Qualifying plant; solar is special-rate expenditure (HMRC CA22335) |
| Time limit | Expenditure incurred by 31 March 2027 (Corporation Tax) or 5 April 2027 (Income Tax) | Permanent (AIA at £1m since April 2023) |
| Above the cap / after the deadline | AIA, or the main-rate pool | Companies: 50% first-year allowance, balance in the 6% special-rate pool. Unincorporated: 6% pool |
| Full expensing? | Not needed — the FYA already gives 100% | No. Full expensing is for main-rate plant; special-rate assets get the 50% allowance instead |
| Who can claim | Companies and unincorporated businesses | AIA: companies and unincorporated businesses. 50% FYA: companies only |
Sources: HM Treasury policy paper on extending first-year allowances for zero-emission cars and chargepoints (26 Nov 2025); legislation.gov.uk, CAA 2001 s45EA; GOV.UK, "Check if you can claim full expensing or 50% first-year allowances"; GOV.UK Annual Investment Allowance; HMRC Capital Allowances Manual CA22335.
The chargepoint first-year allowance
The allowance covers expenditure on plant or machinery for an electric vehicle charging point where the plant is unused and not second-hand, and the facility is installed solely for charging electric vehicles. Autumn Budget 2025 extended it by a year: it now applies to expenditure incurred up to 31 March 2027 for Corporation Tax and 5 April 2027 for Income Tax. Because it is a first-year allowance rather than the AIA, it does not use up any of the £1m AIA budget — which matters on a large combined project where the solar alone could approach the cap.
When is expenditure "incurred"? For capital allowances, generally when the obligation to pay becomes unconditional — often on delivery or completion, not when you sign an order or pay a deposit. A project that completes on 2 April 2027 may miss the Corporation Tax deadline even if it was ordered months earlier. Check the contract terms with your accountant if the dates are close.
Solar panels: special-rate plant
Since April 2012 solar panels have been designated special-rate expenditure. That does not stop them getting 100% relief: the Annual Investment Allowance covers special-rate plant, and a business can choose to allocate its AIA to the solar rather than to main-rate items. The difference only bites above £1m of qualifying spend in a year, where companies get a 50% first-year allowance on the special-rate excess and write the rest down at 6% a year. The widely publicised 40% first-year allowance introduced from 1 January 2026 applies to main-rate expenditure, so it does not help with solar.
Grants reduce what you can claim
Allowances are given on the expenditure you bear yourself. Where a public grant such as the WCS chargepoint grant pays part of the cost, that part is not qualifying expenditure, so claim the FYA on the chargepoint cost after the voucher discount. On a twenty-socket project with £10,000 of WCS funding, the first-year allowance is on the invoice total less £10,000. How the voucher and the solar reliefs sit on one project is covered in using the WCS grant alongside solar panels. The same rule applies to the Depot Charging Scheme: what a grant pays is not qualifying expenditure.
Leases, PPAs and who claims
Allowances go to whoever incurs the expenditure and owns the plant. If a funder or PPA provider owns the array or the chargers and sells you the electricity or the charging service, they claim the allowances and you do not — the benefit should show up in their price. Under a hire-purchase agreement the business using the asset can normally claim as if it owned it.
Worked example: a company installing both
A company with profits taxed at the 25% main rate buys a 50 kW roof array and ten workplace sockets.
| Item | Cost | Relief | Tax saved at 25% |
|---|---|---|---|
| Solar, 50 kW | £58,350 (50 × £1,167, DESNZ 2025/26 mean) | AIA, 100% | £14,588 |
| Chargers, 10 sockets | £15,000 (assumption: £1,500 per socket) | — | — |
| Less WCS | −£5,000 | not qualifying | — |
| Chargers after grant | £10,000 | FYA, 100% | £2,500 |
| Total | £68,350 net | £17,088 |
The same project finished after 31 March 2027 would still get 100% on everything through the AIA, as long as total qualifying spend that year stays within £1m — but the WCS would have closed. The value of the relief to your business depends on your tax position; a loss-making company gains nothing in year one. The business case for solar-powered charging puts these numbers alongside the energy savings, and solar EV charging costs explains where the cost figures come from.
Business rates, VAT and employee tax
- Business rates (England): on-site renewable generation plant and EV chargepoint plant are excluded from rateable value from 1 April 2022 until 31 March 2035 (S.I. 2022/405). Wales and Scotland have their own exclusions for on-site renewable generation plant, also running to 31 March 2035; check the scope for chargepoints in each nation.
- VAT: commercial installations are standard-rated; a VAT-registered business normally recovers the VAT. The 0% rate on solar panels applies to residential property only.
- Employees: charging made available generally to employees at or near the workplace is not a taxable benefit (ITEPA 2003 s237A); see whether a company can pay for employees' EV charging.
For how the two systems work together physically, see how solar and chargers share one site supply.
Capital allowances questions
Can solar panels be fully expensed?
No. Full expensing is for main-rate plant, and solar panels are special-rate. Most businesses get 100% relief on solar through the Annual Investment Allowance (up to £1m a year); above that, companies get a 50% first-year allowance on the special-rate excess.
When does the EV chargepoint first-year allowance end?
On 31 March 2027 for Corporation Tax and 5 April 2027 for Income Tax, after a one-year extension announced at Autumn Budget 2025. The equipment must be unused and not second-hand.
Do I claim allowances on the full cost or after the grant?
After it. The part of the cost paid by a public grant such as the Workplace Charging Scheme is not qualifying expenditure.
Can a sole trader or partnership claim these allowances?
Yes for the Annual Investment Allowance and for the chargepoint first-year allowance (to 5 April 2027 for Income Tax). The 50% first-year allowance for special-rate plant is available to companies only.
Are solar panels and chargers exempt from business rates?
In England, on-site renewable generation plant and EV chargepoint plant are excluded from rateable value from 1 April 2022 until 31 March 2035 (S.I. 2022/405). The land and some supporting structures can still be rateable.
Sources
- HM Treasury — Capital allowances: extension of first-year allowances for zero-emission cars and chargepoints (26 November 2025).
- Capital Allowances Act 2001, section 45EA.
- GOV.UK — Check if you can claim full expensing or 50% first-year allowances; Annual Investment Allowance.
- HMRC Capital Allowances Manual — CA22335 (solar panels as special-rate expenditure).
- S.I. 2022/405 — The Valuation for Rating (Plant and Machinery) (England) (Amendment) Regulations 2022.
- Income Tax (Earnings and Pensions) Act 2003, section 237A.
This page explains the rules as published on 27 September 2026. It is not tax advice; confirm the treatment for your business with your accountant.
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