Business rates and solar: the exemption that runs to 2035
In England, rooftop solar and the battery storage that goes with it have been exempt from business rates valuation since April 2022, and the exemption runs to 31 March 2035. Scotland does it differently, through a relief with a community benefit test rather than an exemption.
In England, onsite solar is exempt from business rates until 31 March 2035.
Eligible plant and machinery used mainly or exclusively for onsite renewable generation and storage was taken out of the rating valuation from 1 April 2022. Scotland does something different and narrower.
England: an exemption, with a date on it
The Valuation for Rating (Plant and Machinery) (England) (Amendment) Regulations 2022 exempt eligible plant and machinery used in onsite renewable energy generation and storage from the rating valuation. The explanatory memorandum names the obvious case directly: “eligible plant and machinery used in onsite renewable energy generation and storage, such as rooftop solar panels”.
Three things worth pinning down.
It covers storage too, both batteries used with onsite renewables and plant used for storage at electric vehicle charging points.
The equipment must be used “mainly or exclusively” for those purposes. That is the instrument’s own test, and the valuation officer applies it.
It started early. The exemption had been planned for 2023 and was brought forward to 1 April 2022.
A commercial array installed in 2026 has a design life that runs well past 2035.
On the instrument as it stands, roughly the first nine years of that life are exempt and the rest are not. Anyone modelling the whole life of the asset should know that the rating treatment is scheduled to change partway through it, rather than discovering it in 2035.
We are not forecasting a rates bill. We are saying the exemption has an expiry date and most financial models we have seen do not mention it.
Scotland: a relief, and a harder test
Scotland does not exempt the plant. It offers Renewable Energy Generation Relief, which is a discount on the bill, banded by rateable value:
| Rateable value | Relief |
|---|---|
| Up to £145,000 | 100% |
| £145,001 to £430,000 | 50% |
| £430,001 to £860,000 | 25% |
| £860,001 to £4 million | 10% |
| Over £4 million | 2.5% |
Photovoltaics and solar power are both on the eligible list. But two conditions do most of the work, and they exclude most rooftop installations:
Generation must be the property’s main use. The guidance’s own example is that a wind turbine above a shop does not qualify. A rooftop array on a trading building is in the same position: the building’s main use is the trade, not generation.
100% relief requires a community benefit test. The scheme must give community organisations either at least 15% of annual profit, or an amount equal to the annual profit from 0.5 MW of the project’s total installed capacity.
So the Scottish relief is aimed at generation sites — solar farms and community schemes — rather than at a business putting panels on its own roof. A separate 60% relief applies to water-powered schemes with a rateable value under £5 million, available until 2032.
What this means in practice
An English business putting solar on its own roof should expect the array not to increase the rateable value, on the current rules, until 2035. Check with the Valuation Office Agency rather than assuming.
A Scottish business doing the same should expect no relief, because generation will not be the main use of the property. That is a real difference in the economics of the same installation on either side of the border, and it does not appear in any national cost figure.
A solar farm or community scheme in Scotland is the case the relief was designed for, and the community benefit test is worth reading closely before the structure is settled — it is easier to design in than to retrofit.
Sources
- The Valuation for Rating (Plant and Machinery) (England) (Amendment) Regulations 2022 — explanatory memorandum SI 2022/405. Cited and read, never mirrored — legislation.gov.uk serves point-in-time versions a static copy cannot.
- Renewable Energy Generation Relief Scotland's relief, its rateable value bands and the community benefit test.
Contains public sector information licensed under the Open Government Licence v3.0.
Sorry to hear that. What was the problem?