Stakeholders in the UK solar industry, including trade associations are coming to terms with the fact that business rates on self-owned commercial rooftop solar PV will rise between six and eight times as of April 2017.

The change is coming due to a wider re-evaluation of business rates that take place every five to seven years, where the Valuation Office Agency (VOA) looks at how assets are valued, the income they generate and how costs have evolved over that period. Solar panels will now to be interpreted as ‘plant and machinery’ by the VOA and will therefore be rateable on the ‘contractor’s basis’.

The change will primarily affect businesses that have solar on their roof (where they themselves own the system and installed it with a view to using most of the electricity themselves) but it may also affect public authorities, state schools and community buildings that have solar on their roofs. However, the change will not affect domestic solar homes or properties where the solar panels are owned by a third party.

Although there has been extensive lobbying for solar panels to be exempted from the business rates increase, the issue was overlooked in the Chancellor’s Budget. Unless the Government intervenes, there is a potential significant effect that this change may have on both existing and proposed projects.

It might be possible to put in place legal structures to mitigate these rates hikes, however caution should be advised and expert legal advice should be taken in this regard.