Business Rates and Solar Panels (Commercial Exemption)

Solar doesn’t increase business rates if you use the energy

If you’re looking at installing solar panels on your commercial property, one of the drier, but highly beneficial things to look at is how it affects your business rates. The simple answer is, they don’t add any extra value so your rates stay the same (pre-solar). This is another big benefit alongside the SEG. The only thing to watch is whether you use the electricity for yourself or export it all, as the exemption only applies if you self-consume. Still, a win for businesses. Ends 31 March 2035, so you have plenty of time.

Let’s walk though all the details so you get it right.

What business rates are, in one minute

Business rates, formally non-domestic rates, are a tax on most commercial property: shops, offices, factories, warehouses, pubs, farms, care homes and the like. Your bill is worked out with a simple sum. The Valuation Office Agency (VOA) sets a rateable value for the property, roughly its estimated annual rental value on a set date. That figure is then multiplied by a national multiplier, sometimes called the poundage, to give the yearly charge before any reliefs.

For 2026/27 in England the small business multiplier is 43.2p and the standard multiplier is 48.0p, alongside new lower multipliers for retail, hospitality and leisure and a higher multiplier for the largest properties. A property with a rateable value of £40,000 on the small business multiplier therefore faces a headline charge of about £17,280 a year. Anything that raises the rateable value raises the bill. That’s exactly where solar used to cause a problem, and exactly what the exemption fixes.

The exemption, explained

At the 2021 Autumn Budget the government announced a targeted business rates exemption for eligible plant and machinery used in onsite renewable energy generation and storage, due to start in April 2023. At the Spring Statement on 23 March 2022 the Chancellor brought it forward a year, so in England it took effect from 1 April 2022 and runs until 31 March 2035. It was delivered through changes to the plant and machinery valuation rules, so the VOA simply doesn’t include qualifying green kit when it works out your rateable value.

In plain terms: rooftop solar panels, wind turbines and onsite battery storage used to power the building they sit on are left out of the property’s rateable value. There’s no separate certificate to chase and no relief to claim on the bill. The saving shows up as an absence: the solar isn’t in the number your rates are calculated from.

This matters because the rule used to work the other way. Before the exemption, only very small microgeneration benefited, and only until the next revaluation. The 2017 revaluation then pushed solar rateable values up sharply, in some cases by several hundred per cent for businesses, which left companies paying more in rates for the crime of generating their own clean power. The 2022 measure removed that penalty. If you install now, the panels cost you nothing in rates for the life of the exemption.

What qualifies and what does not

The exemption is aimed at onsite generation for self-consumption. That’s the phrase that decides most cases. A system on your own roof, feeding your own building, owned by the ratepayer, is the clean-cut example. Once you move away from that pattern, the position gets more involved.

The reason for the split is that grid-scale generation has always been rated on a different basis to the equipment inside an ordinary commercial building. The 2022 exemption levelled the playing field for onsite kit, bringing it into line with off-site generation that already sat outside normal property rating. It was never meant to cover a commercial solar farm whose whole purpose is to sell power. If your project sits somewhere between the two, that’s the point to get written confirmation from the VOA before you build your business case on the saving.

How much the exemption is worth

Because the panels are simply left out of the rateable value, the true value of the exemption is the rates you would otherwise have paid on that uplift, every year until 2035. Working out the exact figure needs the VOA’s own valuation, but you can get a defensible estimate with two numbers: the value the array would have added to your rateable value, and the multiplier.

Onsite plant is valued on what surveyors call the contractor’s basis, broadly a percentage of the adjusted capital cost. Applying the standard 4.4% decapitalisation rate and the 48.0p multiplier, every £1,000 of assessed capital value would have cost roughly £21 a year in rates. Scale that up and the numbers get meaningful across a commercial system, and across the years remaining before the exemption ends.

Over a full run to 2035, a 100 kWp array installed today represents around £12,000 in business rates never paid, and a 250 kWp system closer to £28,000. Those are illustrative figures, assuming an effective capital value of 85% of installed cost, not a quote, and the VOA’s actual valuation of your specific scheme can land higher or lower. The point stands either way: on a mid-size commercial roof this isn’t loose change. It sits alongside the energy bill savings, not instead of them, and it’s one reason to check whether the wider numbers stack up for your site.

The self-consumption vs export trap

This is where the biggest misreadings happen. The exemption covers generation used to power the property. It doesn’t cover a system whose electricity is wholly or mostly sold. A long-standing rating principle treats a site that mainly exports as a generating station, valued in its own right rather than left out of your property’s rateable value. So the same panels can be exempt or rateable depending on where the power goes.

For most commercial installs this isn’t a problem. Businesses fit solar to cut their own energy bills, and self-consumption is the priority anyway because it’s worth far more than the export rate. The trap only bites at the margins, where a very large array sits on a building with modest demand.

Who benefits: owners, landlords, tenants and PPAs

Ownership and occupation nudges who gets the benefit, and how cleanly. The exemption sits with the property, but the practical picture depends on who is the ratepayer and who owns the panels.

Scotland, Wales and Northern Ireland

Business rates are devolved, so each nation legislated for the exemption separately, and on different dates.

Scotland

Scotland has had its own version since 1 April 2023, when the Scottish Government amended its plant and machinery rules to except onsite renewable generation and storage, including rooftop solar and storage at EV charging points, until 31 March 2035. Values are set by the Scottish Assessors rather than the VOA, and the basic property rate for 2026/27 is 48.1p, rising to 53.5p for rateable values between £51,001 and £100,000 and 54.8p above that. Scotland’s separate Renewable Energy Generation Relief is a different thing: it’s for sites used solely to generate renewable power under a community-benefit arrangement, typically sharing at least 15% of annual profit with community organisations, not for a business using its own rooftop output.

Wales

Wales followed on 1 April 2024 with an equivalent exception for onsite renewables and EV charging point storage, also ending 31 March 2035. The VOA values Welsh property, so a Welsh commercial rooftop install is treated much like an English one.

Northern Ireland

Northern Ireland runs a separate rating system administered by Land and Property Services and has no 2035 exemption. Its practice is to value self-consumption solar with the building unless it counts as microgeneration of 50 kW or less. If your property is in Northern Ireland, confirm the position directly with LPS.

How to make sure you actually get it

Because the exemption is automatic in England, Scotland and Wales, most businesses do nothing and get it correctly. The risk isn’t that you have to apply, it’s that your rateable value was set wrongly, or set before the exemption, and still includes solar that should have been excluded.

• Check your current rateable value. Use the Find a Business Rates Valuation service on GOV.UK, or the Scottish Assessors website, and see whether any solar or generation value appears in the assessment.
• If solar is in your rateable value, contact the VOA, or your Assessor in Scotland. Qualifying onsite generation and storage should be excluded. Ask for it to be removed if it’s still there from an older assessment.
• Keep your installation paperwork. Capacity, ownership, and evidence that the system serves onsite consumption make any query with the VOA straightforward.
• Confirm the position for anything non-standard. Ground-mount, private-wire supply to tenants, or heavy export all warrant written confirmation before you rely on the saving.

What happens after 2035

The exemption is legislated to end on 31 March 2035. Unless it’s extended, qualifying solar could re-enter the rateable value from that date, and rates could apply on the panels’ assessed value from then on. That’s a long way off, but it has a near-term effect worth understanding: the earlier you install, the more years of exemption you capture. A system fitted now banks about eight and a half years of the relief. One fitted in 2032 banks only three.

Wider considerations for your business case

The rates exemption rarely tips a decision on its own, but it improves an already strong case. VAT-registered businesses recover input VAT on the installation in the normal way. Companies buying the system outright can use capital allowances, either the Annual Investment Allowance or full expensing, to write down qualifying spend against taxable profit. And the rates exemption keeps the panels off the property tax base for the life of the measure. Three reliefs, three parts of the tax system, all pointing the same way.

The sensible order is to model the energy bill savings first, since they’re the main return, then layer the tax reliefs on top. It’s also worth checking the specifics for your building type, because roof space, demand profile and shift patterns differ a lot between, for example, a distribution warehouse, an office building and a set of farm buildings. Our overview of commercial solar costs sets out the capital side, and the guide to the less obvious costs of going solar covers what sits outside the headline quote.