Solar Investment Tax Credit Calculator (UK)

How to use this calculator

The calculator above stacks the capital-allowance tax shield, any direct credit, and a flat grant or incentive into a single net-cost number for UK commercial buyers:

1. Gross system cost — total quoted price by the MCS-certified installer for commercial PV. Solar Energy UK’s 2025 industry data puts commercial rooftop at £900–£1,200/kWp installed, so a typical 80 kWp system runs £75,000–£95,000.
2. Capital allowance / credit (% of cost) — usually 0 unless a future ITC is introduced. UK relief flows through the depreciation shield instead.
3. AIA / capital allowance tax shield — 100% Annual Investment Allowance × 25% Corporation Tax = 25% of cost. Adjust to 19% if your profits sit below £50,000 (small-profits rate). The 50% FYA route closes for expenditure from April 2026.
4. Grant / cash incentive — Welsh Government Energy Service grants, Industrial Energy Transformation Fund (IETF), Innovate UK Smart Grants, Local Authority decarbonisation funds.

How the math works

qualifying_basis = gross_cost (assuming AIA cap not exceeded)
allowance_shield = qualifying_basis × corp_tax_rate
seg_income       = annual_export_kWh × seg_tariff   (year-on-year, separate from capital relief)
total_relief     = allowance_shield + grants
net_cost         = gross_cost - total_relief

A typical 80 kWp warehouse rooftop project at £90,000 with 100% AIA, 25% Corporation Tax, no grant:

• AIA deduction year 1: £90,000
• Corporation Tax saved: £90,000 × 25% = £22,500
• SEG income (12,000 kWh exported × 15p): £1,800/year recurring (separate stream)
• Net cost after AIA shield: £90,000 − £22,500 = £67,500 (25% effective discount on capital outlay)

If the same project secures a £5,000 Welsh Government Energy Service grant, the net falls to £62,500, an effective 30.6% discount before any SEG or self-consumption savings are counted.

Annual Investment Allowance vs. 50% First-Year Allowance — what to choose

For accounting periods straddling April 2026, the choice matters:

Solar PV is special-rate-pool plant. For most SMEs with annual capex ≤£1m, AIA wins because it gives 100% in year 1 vs. 50% under FYA. For large companies whose AIA is exhausted by other capex, the 50% FYA was a useful alternative for solar — but it sunsets April 2026 under the Spring Statement 2025 announcement, leaving 6% writing-down allowance as the only option above the £1m AIA threshold.

Corporation Tax rates (Finance Act 2023, applying from April 2023)

• Main rate: 25% — profits above £250,000
• Small-profits rate: 19% — profits up to £50,000
• Marginal relief: taper between £50,000 and £250,000, effective marginal rate of 26.5% on profits in the band

For a small SME at the small-profits rate, an £80,000 project produces an AIA shield of only £15,200 (19% × £80k) versus £20,000 at the main rate — but you should still claim AIA because the cash saving is in the same accounting period rather than dribbled out over years of writing-down allowances.

Smart Export Guarantee tariffs (Q2 2026)

Compare the licensed-supplier offers at gov.uk/feed-in-tariffs. Top commercial-eligible tariffs as of April 2026:

A higher SEG tariff materially shifts payback — for a system that exports 50% of its 80,000 kWh annual output, the difference between 4p (OVO) and 16.5p (E.ON Next) is £5,000/year recurring, equivalent to a 5.5% standing yield on the £90,000 capex.

Solar Energy UK data and pricing benchmarks

Solar Energy UK’s 2025 industry survey reports commercial rooftop median pricing at £980/kWp for 50–250 kWp installations, falling to £820/kWp at 250 kWp+ and £640/kWp at MW-scale ground-mounted. MCS-certified installers (search at mcscertified.com) are required for SEG eligibility. The Energy Saving Trust publishes commercial-PV guidance at energysavingtrust.org.uk including BS 7671 Section 712 wiring requirements and Microgeneration Certification Scheme MIS 3002 standards.

Worked example — 200 kWp logistics warehouse, North West England

• Gross system cost: £180,000 (£900/kWp, MCS-certified EPC contract)
• AIA: full £180k below £1m cap → 100% allowance
• Corporation Tax rate: 25% (profits well above £250k threshold)
• Capital allowance shield: £180,000 × 25% = £45,000
• IETF Phase 3 grant (warehouse decarbonisation bundle): £15,000 awarded
• Net cost: £180,000 − £45,000 − £15,000 = £120,000
• Effective discount: 33.3%
• Annual SEG export income (60% × 200,000 kWh × 15p): £18,000/yr recurring (not in basis)

Combine with a self-consumption fraction of 40% replacing 27p/kWh grid power, the project saves another £21,600/year, putting simple payback at under 4 years on a 25-year-asset.

Pair this with the tax credit calculator, cost calculator, and payback calculator

The investment tax credit calculator gives the upfront net-cost; the payback calculator turns it into break-even years using your wholesale or commercial-tariff power price; the cost calculator benchmarks your gross before relief.

Sources

• HMRC — Capital Allowances Act 2001 — primary legislation
• HMRC Capital Allowances Manual (CA22335) — special-rate pool guidance
• Ofgem — Smart Export Guarantee — scheme detail
• Solar Energy UK — Industry Reports — pricing benchmarks
• MCS — Microgeneration Certification Scheme — installer directory
• Energy Saving Trust — Commercial Solar PV — installation guidance
• DESNZ — Industrial Energy Transformation Fund — grant programme