Readers' forum: Sunshine tax

03 November 2015

Issue: 4525 / Categories: Forum & Feedback , Capital allowances

What tax relief and capital allowances are due on a solar panel installation?

A farmer trades as a sole proprietor and plans to buy a solar panel installation. An asset finance company has suggested that he sell it the plant which it will resell back under a lease purchase agreement – a form of conditional sale. Title will pass back to my client on payment of the final instalment or earlier settlement. My questions are as follows.

Can I treat the construction costs as installation of plant and machinery and claim capital allowances (PMAs) including annual investment allowances (AIAs)? The costs of £120 000 for the plant and £35 000 installation and assembly seem to be allowable at CA20070 but this refers to professional costs. Should it include installation and assembly costs? There is an underground cable but will the trench costs be allowed?

Am I right in capitalising the grid connection costs and making no claim? My view on the...

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